Niger ECONOMIC UPDATE Special chapter Strengthening the Agri-Food System April 2025 1 © 2025 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use Rights and Permissions the information, methods, processes, or conclusions The material in this work is subject to copyright. set forth. The boundaries, colors, denominations, and Because The World Bank encourages dissemination other information shown on any map in this work do of its knowledge, this work may be reproduced, in not imply any judgment on the part of The World whole or in part, for non-commercial purposes as Bank concerning the legal status of any territory or long as full attribution to this work is given. the endorsement or acceptance of such boundaries. Any queries on rights and licenses, including Nothing herein shall constitute or be construed or subsidiary rights, should be addressed to World Bank considered to be a limitation upon or waiver of the Publications, The World Bank Group, 1818 H Street privileges and immunities of The World Bank, all of NW, Washington, DC 20433, USA; fax: 202-522- which are specifically reserved. 2625; e-mail: pubrights@worldbank.org. 2 TABLE OF CONTENTS ABBREVIATIONS AND ACRONYMS 6 ACKNOWLEDGEMENTS 7 EXECUTIVE SUMMARY 8 1 . ECONOMIC AND POVERTY DEVELOPMENTS AND OUTLOOK 11 1.1 Recent Economic and Poverty Developments 12 1.2 Spotlight: The Impact of Sanctions on Firms and Households 19 1.3 Economic and Poverty Outlook 24 2 . STRENGTHENING THE AGRI-FOOD SYSTEM 28 2.1 Background and Overview 28 2.2 Key Challenges 31 2.3 Opportunities 34 2.4 Actionable Priorities 36 3 . ANNEX 39 3.1 Selected Economic, Fiscal and Poverty Indicators 39 3.2 Analysis of the 2025 Budget 40 4 . REFERENCES 43 3 TABLE OF BOXES, FIGURES, AND TABLES Box 1.1 Government measures to ease the cost of living 14 Box 1.2 The impact of economic sanctions and government measures on food trade and 26 food security Box 2.1 Potential reform actions in the primary production sectors 37 Figure 1.1 Agriculture remained the major sectoral contributor to growth in 2024 12 Figure 1.2 Large scale oil exports drove growth on the demand side 12 Figure 1.3 Headline inflation surged in 2024, far above the WAEMU average 13 Figure 1.4 Mainly food prices in Niger fueled the overall inflation 13 Figure 1.5 Job postings declined by 60 percent, reflecting the challenges in the private sector 15 Figure 1.6 The share of jobs in extractives rose with the expansion of the oil sector 15 Figure 1.7 Lower revenue collection led to cuts in capital expenditure in 2024 16 Figure 1.8 The debt servicing to revenue ratio surged in 2024 to 34.2 percent 16 Figure 1.9 Amid higher debt issuance in 2024, average yields increased accross the board 17 Figure 1.10 Niger pays more on its debt than almost any other WAEMU country 17 Figure 1.11 The ratio of non-performing loans reached 24 percent by the end of September 18 2024 Figure 1.12 The average solvency ratio in Niger plummeted from 20.5 percent to 9.8 18 Figure 1.13 Extreme poverty decreased as GDP per capita grew 19 Figure 1.14 Most of the surveyed businesses are categorized as commerical 20 Figure 1.15 The majority of formal business were affected by the sanctions, informal businesses 20 less Figure 1.16 Three quarters of firms report increasing fluctuations during the sanctions 20 Figure 1.17 More than 40 percent of firms report a drop in sales of more than 50 percent 20 under sanction Figure 1.18 For formal and informal firms alike, employment decreased, particularly for part- 21 time jobs Figure 1.19 The employment of more than half of all firms was significantly affected 21 Figure 1.20 Sanctions led to reduced activities of heads of household particularly old-aged, in 22 urban areas, with large families, and working in commerce Figure 1.21 Especially smaller households in Niamey working in personal services are exposed 23 to various difficulties, as school-related expenditures took the strongest hit Figure 1.22 Household income decreased for three quarters of households across urban and 24 rural areas and professions Figure 1.23 Situation on food insecurity estimations (Oct.- Dec. 2024) and projections (Jun.- 27 Aug. 2025) Figure 2.1 The agriculture sector contributes around 40 percent to GDP 29 Figure 2.2 Real GDP per capita growth is highly correlated with agriculural output 29 Figure 2.3 Niger’s main livelihood zones are (agro-)pastoralism and a rainfed cereal belt 29 Figure 2.4 Niger’s cropland is concentrated in the south and largely rainfed 30 Figure 2.5 A set of five key issues best describes the challenges to sustained agriculture 31 growth in Niger Figure 2.6 While most crops grew slowly at best, rice yields have increased strongly since 32 2000 4 TABLE OF BOXES, FIGURES, AND TABLES Figure 2.7 Average cereal yields in Niger are below all peers and the regional average 32 Figure 2.8 Major climate shocks have significantly impacted cereal and crop yields over the 33 past two decades Figure 2.9 Agribusiness development, irrigation, and climate smart practices offer 34 opportunities to boost production Figure 2.10 Prioritization of actionable measures will help boosting the sector 36 Figure A.1 2025, the budget deficit is expected to reach 3.8 percent of GDP 41 Figure A.2 Debt servicing became more important in 2024 reaching 34.2 percent of total 41 revenue Figure A.3 Debt servicing became more important in 2024 reaching 2.9 percent of GDP 41 Figure A.4 2025 budget projects total expenditure at 16.1 percent of GDP and revenue at 12.3 42 percent Figure A.5 The WB projects total revenue at 10.5 percent of GDP and expenditures at 14.3 42 percent of GDP in 2025 Table E.0.1 Policy options to strengthen macro-fiscal sustainability and the agri-food system 10 Table A.3.1 Selected Economic, Fiscal and Poverty Indicators, Niger, 2022-2027 39 Table A.2 BAT and OAT maturing in 2025 reach CFAF 702.1 billion 41 5 ABBREVIATIONS AND ACRONYMS AES Alliance des États du Sahel (Alliance of Sahel States) ANPE National Employment Agency BCEAO Banque Centrale des États de l’Afrique de l’Ouest (Central Bank of West African States) CFAF Franc de la communauté financière en Afrique (Franc of the Financial of Africa) CSA Climate-smart agriculture DRM Disaster risk management DNPGCCA National Food Crisis Prevention and Management Mechanism ECOWAS Economic Community of West African States EHCVM Enquête harmonisée sur les Conditions de Vie des Ménages (Harmonized Survey on Living Conditions of Households) GDP Gross Domestic Product INS National Statistics Office IDP Internally displaced persons IMF International Monetary Fund kt kilo ton Mt mega ton NP-DRR National Platform for Disaster Risk Reduction PAGRA Agricultural risk management operational action plan PCS Community Solidarity Levy PUA African Union Levy PFPN National Farmers’ Platform of Niger RECA Network of Chambers of Agriculture REGEN General Business Census RS Statistical fee SS Sub-Saharan Africa TAFI Tax on financial activities TCW Tax Compliance Withholding TIPM Real estate tax for legal entities VAT Value-added tax WAEMU West African Economic and Monetary Union WFP World Food Programme 6 ACKNOWLEDGEMENTS The Niger Economic Update is a World Bank report series produced once a year that assesses recent economic and social developments and prospects in Niger. The Economic Update also provides an in-depth examination of a selected policy issue, outlining its current challenges and potential going forward. It is intended for a wide audience, including policy makers, business leaders, financial market participants, and the community of analysts and professionals engaged in Niger’s evolving economy. The Niger Economic Update was prepared by Mahama Samir Bandaogo, Danon Gnezale, Yele Maweki Batana, Mahaman Achirou Yahaya Arde, and Chimene Diane Djapou Fouthe, with inputs provided by Daniel Pajank, and the support of Jala Emad Youssef and Yannik Strittmatter. A team from the World Food Program (WFP), including Ollo Sib, Mina Suzuki, Anna Law, Alioubadara Samake, Brian Iander and Jean-Martin Bauer, prepared a box on food security. The special focus topic on the agri-food system was written by Mekbib Haile, Senakpon Aurelia Larissa Dakpogan and Jock Anderson, under the overall supervision of Adama Toure (Practice Manager for Agriculture and Food). The team is grateful to the peer reviewers Yue Man Lee, Fulbert Tchana Tchana, Farouk Mollah Banna, Robert Utz and Md Mansur Ahmed for their guidance and comments. The team thanks Micky Ananth, Etsehiwot (Biya) Albert, Etsehiwot (Biya) Albert, Theresa Bampoe and Dodo Oumarou Farouk Alhousseini Sidi for their administrative support. External and media relations are managed by Mouslim Sidi Mohamed. The report was prepared under the overall supervision of Clara De Sousa (Division Director for Burkina Faso, Chad, Mali and Niger), Han Fraeters (Country Manager for Niger) and Hans Anand Beck (Practice Manager for Economic Policy). For more information about the World Bank and its activities in Niger, please consult: https://www. worldbank.org/en/country/niger. 7 EXECUTIVE SUMMARY This 2025 Economic Update for Niger contains two chapters. The first chapter presents the economic and poverty developments observed in the country in 2024 as well as the outlook from 2025 to 2027.1 The second chapter analyzes the agro-food system in Niger and offers recommendations for its effective transformation.2 ECONOMIC AND POVERTY DEVELOPMENTS AND Despite high economic growth, banking and OUTLOOK private sector activities faced significant challenges. Between June 2023 and August GDP growth surged to 8.4 percent in 2024, 2024, the average solvency ratio in the banking driven by a rise in oil production and strong system plummeted from 20.5 percent to 9.8 agricultural output.* The IMF estimates GDP percent, below the BCEAO’s required minimum growth in 2024 at 10.3 percent. Due to a of 11.5 percent. Lower deposits contributed good rainfall, the agricultural sector grew by to a 62 percent decrease in banks’ liquid 11.1 percent. Industrial output surged by 12.1 assets by September 2024 compared to July percent, driven by the start of large-scale oil 2023, severely limiting their ability to lend. production. Oil exports were also the main Consequently, new loans to the private sector growth driver on the demand side, followed by had dropped by over 80 percent by November private consumption (+3.1 percent). Government 2024 compared to mid-2023. The liquidity consumption contracted by 0.3 percent due to crunch of the banking system translated into lower revenue. Meanwhile, private investment heightened challenges in the private sector, continued to decline due to uncertainty and contributing to a 60 percent drop in formal job lower credit provided by the banking sector. creation. Strong agricultural growth reduced extreme The fiscal deficit declined to 4.3 percent of poverty to 45.3 percent in 2024, despite GDP as the government cut expenditures amid 9.1 percent inflation driven by food prices, large revenue shortfalls and tighter financing which worsened food insecurity. Import conditions. Government revenue is estimated at disruptions and a cereal production deficit 9.3 percent of GDP, compared to 14.4 percent in 2023 contributed to elevated inflation in budgeted. The Niger-Benin border closure and 2024, especially through higher food prices. disruptions in oil and uranium exports caused a Nevertheless, the extreme poverty rate fell by significant shortfall in trade-related tax revenue. 2.5 percentage points to 45.3 percent, reducing Additionally, grants fell to 1.5 percent of GDP, the number of people in extreme poverty by over down from an average of 6.3 percent of GDP 270,000. However, rural areas still face higher over 2018-2022, following the unconstitutional poverty rates (52.2 percent) compared to urban change in government. Due to the large revenue areas (10.1 percent). By October 2024, 1.5 million shortfall, the government executed only half of people (5.6 percent of the population) faced planned capital spending to contain the deficit severe food insecurity due to conflict, climate financing needs, given very high interest rates in shocks, and high food prices exacerbated by the regional bond market. The debt sustainability trade disruptions. deteriorated due to rising debt service arrears and lower revenues, leading to a downgrade of the country’s debt risk rating to high risk of debt distress. 1 This report contains data and analysis through March 2025. 2 The second chapter draws on: World Bank (2023). Transforming the Nigerien Agri-Food System, Report No: DLV0563898, World Bank, Washington, DC, December * The GDP growth estimate for 2024 is likely to be revised upward as it does not reflect the latest data on agriculture and oil production. 8 Economic growth is expected to slow to 7.1 The agriculture sector is lagging relative to percent in 2025, still supported by oil exports, neighboring countries in productivity, which and average 4.8 percent in 2026-2027. Crude oil is due to various factors, with agricultural production is expected to reach 28 million barrels output expansion mostly on the extensive in 2025. Inflationary pressures are expected to margin. Niger’s cereal yields, averaging about ease in 2025 as the Niger-Benin border reopens 0.6 t/ha compared to a potential of some 2 t/ha, in the second half of the year. Extreme poverty lag those of neighboring countries (Burkina Faso, rate is projected to gradually decrease to 36.2 Mali, and Nigeria), and are just 36 percent of the percent by 2027, representing a reduction of 9.1 average for Sub-Saharan Africa (SSA). Increase in percentage points from 2024 and a decrease of production has mainly stemmed from expansion nearly 1.5 million people living in extreme poverty. in cultivated areas and size of livestock herds and The budget deficit is projected to narrow on the flocks. Limited gains in productivity are due to back of an improvement in revenues. scarce access to improved technologies, weak advisory services, limited access to finance, and The outlook remains subject to significant limited marketing and value addition. downside risks and some upside risks. The sources of economic growth are narrow and The agriculture sector is highly vulnerable subject to shocks and security challenges. to climate change. Increasing frequency of Banking sector risks could materialize and droughts, floods, and heatwaves impact crops further disrupt private sector activities. Trade and livestock yields, exacerbating existing disruptions could persist if tensions with Benin are vulnerabilities and threating food security and unresolved and negotiations with the Economic livelihoods. Over the past two decades, Niger Community of West African States (ECOWAS) faced at least nine major droughts and five major unsuccessful. The recent oil price shock after the floods, affecting its rural population and rainfed latest global trade developments should be also agriculture. Climate change contributes to the considered as Niger is now an oil exporter. These Niger’s food crisis, occurring every four years on could have negative implications for inflation, average. Future projections indicate significant government revenues, and service delivery. On natural annual variability in precipitation, with the upside, a clearance of government arrears an anticipated increase of nearly 25 percent in and an improvement in liquidity in the banking rainfall during the rainy season by the 2050s. sector could help the recovery of private sector Heavy precipitation events are also likely to credit. Additionally, there are opportunities to occur at least twice as many times resulting in make the agricultural sector more resilient. significant flood risk. STRENGTHENING THE AGRI-FOOD SYSTEM Despite these challenges, there are also several opportunities available to strengthen The agri-food system in Niger faces challenges the agri-food system. Expanding irrigated embedded in a national development context agriculture offers significant growth potential, marked by high fertility, challenging migration especially in southern areas with higher rainfall patterns, and slow infrastructure progress. Most and favorable conditions for diverse crops. critically, the national fertility rate (6.7 children Further, strengthening value chains and per woman estimated in 2022)3 is among the producer organizations is crucial for building world’s highest. Migration patterns, challenging formal marketing and value addition channels, in many parts of the world, have also been adding creating jobs, and improving market access. to the growing population issue, with in 2024 Moreover, investing in climate-smart agriculture some ¾ million new arrivals from neighbors such (CSA) technologies, such as drought-resistant as Burkina Faso and Mali.4 National progress in varieties, integrated soil fertility management solar energy has been slow, matching the slow (including organic and chemical fertilizers), advance in safe hydrological controls. Both are and water harvesting, is essential for building crucial for addressing the challenges posed by resilience and increasing productivity. Several climate change. policy options are available to reap some low hanging fruits and implement reforms over the medium term. 3 https://data.worldbank.org/indicator/SP.DYN.TFRT.IN?locations=NE 4 https://www.worldbank.org/en/country/niger/overview (citing UNHCR) 9 TABLE E.0.1 POLICY OPTIONS TO STRENGTHEN MACRO-FISCAL SUSTAINABILITY AND THE AGRI-FOOD SYSTEM Policy Objectives Policy Options Feasible to implement in the short-term (1 year) Improve debt Establish and implement a realistic and credible domestic arrears clearance plan to • sustainability and improve debt sustainability. transparency  esume the publication of debt bulletins. •R Enhance revenue Broaden the tax base by operationalizing the taxpayer’s online registration portal and • mobilization and tax mobile tax payment. efficiency Operationalize the post-customs clearance audit and control by establishing a • systematic process to review customs declarations, including setting up a dedicated audit team and developing standardized procedures. Improve oil revenue • Implement the adopted oil revenue management framework by adopting an oil management reference price for budget preparation. • Improve short-term and long-term oil revenue forecasting by developing and adopting a comprehensive oil production and revenue model that explicitly includes operating expenses, capital expenditures, and cash flow. Increase agriculture Facilitate investments in irrigation infrastructure, particularly in the southern region • climate-resilience with higher rainfall and favorable conditions for diverse crops. Promote solar-powered village grain mills, donkey-drawn weeders, and group-shared • tractors for tillage. Important to implement in the medium term (2 to 5 years) Enhance revenue Strengthen the digital tax administration to improve efficiency, reduce leakages, and •  mobilization and tax enhance compliance through real-time reporting and automated audits. efficiency •Rationalize tax expenditures based on recommendation by the tax expenditure report. • Automate taxpayer registration and directory management. Increase agriculture Invest in CSA technologies such as drought-resistant crop varieties, integrated soil • climate-resilience fertility management, and water harvesting techniques. Improve access to markets • Strengthen existing producer organizations and value chains through capacity building for agriculture products and support for formal marketing channels Promote the development of agro-processing facilities and infrastructure to add value •  to agricultural products and enhance market opportunities. 10 CHAPTER 1 ECONOMIC AND POVERTY DEVELOPMENTS AND OUTLOOK Niger’s development context is marked by The military authorities have officially instituted vulnerability to climate shocks, recent political a five-year transition period to constitutional instability, and large-scale oil exports. rule, effective from March 26, 2025. A national conference to determine the terms of the political The agriculture sector contributes about transition was held in the capital, Niamey, from 40 percent to GDP, making the economy February 15 to 20. Following the conference, a vulnerable to climate shocks, which are transition charter, which carries the legal weight further aggravated by unfavorable structural of a constitution, was adopted. This charter challenges. Although irrigation has increased outlines an initial transition period of five years, in recent years, rain-fed agriculture remains the with the possibility of extension depending on bedrock of the sector, exposing it to climate the security situation in the country. shocks. This results in low productivity affecting the living standards of over 80 percent of the Niger’s economy is becoming more dependent country’s population employed in the agriculture on hydrocarbon, potentially exposing it to sector. Consequently, 95 percent of the even higher growth volatility. Following the population in extreme poverty live in rural areas. completion of the Niger-Benin pipeline, large This is further aggravated by high population scale oil exports started in May 2024, increasing growth, gender disparities, and weak human the importance of the oil sector in exports, capital development. revenues, and GDP. Total crude oil production is expected to increase from 15,000 to 107,000 Niger’s relative stability ended with the barrels per day by 2025. Assuming the average unconstitutional change in government in July annual oil prices to remain at last years’ level, the 2023, which triggered economic and financial production increase will lead the oil sector to sanctions by ECOWAS and the West African account for 13 percent of Niger’s GDP (up from Economic and Monetary Union (WAEMU) over about 2 percent in 2023). While this expansion nearly 7 months.5 From 2011 to 2023, Niger is expected to boost government revenues, it was considered politically stable in the Sahel, will also amplify the volatility of growth. Unless attracting significant international development there are new discoveries, Niger’s oil production assistance and investment. However, the is projected to start declining in the mid-2030s. unconstitutional government change led to a pause and reduction in development financing. Then on January 28, 2024, Burkina Faso, Mali, and Niger announced their immediate withdrawal from ECOWAS. Subsequently, in July 2024, the three countries signed the Treaty establishing the Confederation of Sahel States, heightening political and policy uncertainty. So far, the three countries have remained committed to WAEMU membership. 5 The sanctions included (i) the closure of land and air borders between ECOWAS countries and Niger; (ii) the suspension of all commercial transactions between Niger and ECOWAS countries; (iii) the suspension of financial transactions between Niger and ECOWAS countries; (iv) the freezing of public assets of the government, state-owned enterprises and parastatals held in the BCEAO and in commercial banks in the WAEMU region; and (iv) the suspension of Niger from all regional financial assistance. The sanctions were lifted on February 24, 2024. 11 1.1 Recent Economic and Poverty Developments6 Niger’s economy rebounded strongly in 2024 banking sector. with an 8.4 percent GDP growth (4.9 percent On the supply side, growth was driven by per capita), following the lifting of sanctions agricultural expansion due to favorable weather and the start of large-scale oil exports. and increased industrial output, mainly from large-scale oil production (Figure 1.1 and Figure Real GDP growth is estimated at 8.4 percent in 1.2). The agriculture sector grew by 11.1 percent, 2024, up from 2.0 percent in 2023, mainly driven compared to 3.1 percent in 2023, driven by a by large-scale oil exports with the completion substantial rebound in rain-fed production (+12.1 of the Benin-Niger pipeline (Figure 1.2). Crude percent), which had contracted in the previous oil exports through the pipeline started in May year. In 2024, rain-fed production is estimated 2024, increasing exports by 48.5 percent. Total to account for 55.3 percent of Niger’s total crude oil production reached 15.5 million barrels agricultural output. In contrast, the expansion in 2024, compared to 7 million barrels in 2023. of irrigated production slowed to 8.8 percent Private consumption growth slowed to 3.1 in 2024, due to a reduction in the irrigated percent, down from 3.5 percent in 2023, due to surface area of major crops. Industrial output higher inflation and a cereal production deficit in has accelerated to 12.1 percent in 2024, fueled 2023. Government consumption contracted by by the start of large-scale oil production for 0.3 percent, compared to 7.0 percent in 2023, exports. while private investment continued to decline due to uncertainty and liquidity shortages in the FIGURE 1.1 FIGURE 1.2 AGRICULTURE REMAINED THE MAJOR SECTORAL LARGE SCALE OIL EXPORTS DROVE GROWTH ON CONTRIBUTOR TO GROWTH IN 2024 THE DEMAND SIDE Contribution to GDP growth (pp), Niger, 2022-2027 Contribution to GDP growth (pp), Niger, 2022-2027 15% 15% 10% 10% 5% 5% 0% 0% -5% -10% -5% 2023 2024e 2025p 2026p 2027p 2022 2023 2024e 2025p 2026p 2027p Private consumption Public consumption Services GDP growth (Factor Cost) Investment Statistical discrepancy Industry Change in inventories Exports, GNFS Agriculture Imports, GNFS GDP Growth Source: Government of Niger, World Bank staff 6 The 2024 estimate for the GDP is likely to be revised upward as it does not reflect the latest data on agriculture and oil production.The GDP growth estimate for 2024 is likely to be revised upward as it does not reflect the latest data on agriculture and oil production. The IMF estimates GDP growth in 2024 at 10.3 percent. 12 Inflation surged in 2024—well above the and closure of the Niger-Benin border disrupted WAEMU average—driven by rising food prices supply chains. This increased transportation and supply chain disruptions, but the harvest costs, resulting in price hikes especially during season provided relief at the end of the year. the first half of the year. During this period, inflation increased steadily, peaking at 15.5 Inflation in 2024 accelerated to 9.1 percent, percent in June 2024. However, it eased in the compared to 3.7 percent in 2023, fueled by a second half of the year with the onset of the hike in food prices (Figure 1.3 and Figure 1.4). As harvest season. Niger is heavily dependent on food imports, the combination of deficit cereal production in 2023 FIGURE 1.3 FIGURE 1.4 HEADLINE INFLATION SURGED IN 2024, FAR ABOVE MAINLY FOOD PRICES IN NIGER FUELED THE THE WAEMU AVERAGE OVERALL INFLATION Monthly inflation (%, y/y), Niger and WAEMU average, Monthly inflation and contribution (%, y/y), Niger, 2022-2024 2022-2024 16 35 14 25 12 10 15 8 5 6 -5 4 2 -15 0 Dec-2022 Jun-2023 Dec-2023 Jun-2024 Dec-2024 Dec-2022 Jun-2023 Dec-2023 Jun-2024 Dec-2024 Food inflation Core inflation Niger WAEMU Energie inflation Headline inflation Source: INS and World Bank staff The WAEMU inflation rate has narrowed since bond issuances, and IMF and World Bank 2022, but remained above the 1-3 percent disbursements. The Central Bank of West African WAEMU target band, at 3.6 percent in 2024. States kept its policy interest rates unchanged Regional foreign reserves increased from 3.5 throughout 2024 at 3.5 percent for liquidity calls months of imports in 2023 to 4.7 months in and 5.5 percent for the marginal lending facility. 2024, reflecting the resumption of international 13 BOX 1.1 GOVERNMENT MEASURES TO EASE THE COST OF LIVING The Government has issued Order No. 0067 to reduce the price of hydrocarbons at the pump, following the commitments made on June 24, 2024. The new prices set by the government reduce the cost of Super 91 from CFAF 540 to CFAF 499 (-7.6 percent) and diesel from CFAF 668 to CFAF 618 (-7.5 percent). The objective of this measure is to lower transport costs and, consequently, reduce the cost of goods. On October 14, 2024, the Government decided to reduce the price of grey cement (CEM II 32.5) to stimulate sector investment for 12 months from the date of the Order’s signature. This decision is part of a broader initiative to stimulate investment and provide tax exemptions in the cement industry. The order outlines a special tax regime for the import, production, and marketing of grey cement (CEM II 32.5), granting significant exemptions to companies legally established in Niger. The exemptions include (a) Total exemption from the tax on financial activities (TAFI) on interest accrued but not yet due on loans, (b) Exemption from value-added tax (VAT) on all energy sources used for production facilities, (c) Exemption from real estate tax for legal entities (TIPM), and (d) Exemption from professional tax (TP). Additionally, these companies will benefit from exemptions on customs duties and taxes, including VAT, but excluding the statistical fee (RS), the Community Solidarity Levy (PCS), and the African Union Levy (PUA) on coal used for producing CEM II 32.5 grey cement. They will also be exempt from VAT on the importation of cement packaging bags and on the sale and transport of CEM II 32.5 grey cement within the country for household use. In October 2024, the Government decided to ban the exportation of cereals from the 2024 harvest. Despite a surplus in the 2024 crop year, cereal prices remained relatively high due to import constraints following the closure of the border with Benin. To alleviate price tensions, the government implemented an export ban. According to the Government, the decision aimed to increase domestic market supplies and make basic foodstuffs more accessible. The cereals subject to the export prohibition include paddy rice, milled rice, millet, sorghum, cowpea, and maize. The export ban does not apply for exports to AES member countries. In September 2024, the Government decided to reduce healthcare fees in public health centers by 50 percent. According to the government, only 1.07 out of 2 Nigeriens have access to a health facility within 5 km, and the average coverage index for basic health services was 49.1 percent in 2021. Additionally, households in Niger cover more than 40.7 percent of healthcare costs, which is a heavy financial burden for low-income families. To increase access to health centers for the most vulnerable, particularly those living in rural areas, the government has decided to reduce health fees by 50 percent. The specific objectives are (a) to harmonize and reduce health costs to facilitate access, and (b) to address the historic challenges facing the health system, including high mortality and infant mortality rates, and the lack of funding for the system. The lingering effects of the sanctions, the liquidity issues, led to more job seekers, likely Benin-Niger border closure, and the liquidity due to increased firings, and fewer job postings. crunch in the banking sector translated into a The National Agency for the Promotion of 60 percent drop in formal job creation. Employment (ANPE) reported an increase in the number of job seekers by 16 percent and a drop The formal labor market was characterized by a in the number of job postings by 22 percent, surge in job seekers, and a steep decline in job with engineers and senior managers accounting postings, likely linked to challenges in the private for the largest share of job seekers; the number sector.7 The economic and financial sanctions of jobs created fell by almost 60 percent (Figure by ECOWAS and WAEMU has disrupted private 1.5). sector activities, leading firms (surveyed) to reduce their workforce or lower hiring. Although While reduced external financing decreased the sanctions were lifted in February 2024, their social sector jobs, large-scale oil production lingering effects on the private sector, along increased employment in the extractive sector. with the Benin-Niger border closure and banking ANPE reports show that the share of jobs in 7 The formal employment market is extremely limited, with the informal employment rate for individuals over the age of 15 reaching 98.5 percent in 2022, according to ILO data. 14 social services declined from 78.5 percent (2021- has shown significant growth in its contribution 2023) to 69.8 percent in 2024. This decline is to employment (Figure 1.6), with its share of jobs likely due to reduced international funding since increasing from an average of 3.2 percent over the unconstitutional change in government in 2021-2023 to 12 percent in 2024. July 2023. Conversely, the extractive industry FIGURE 1.5 FIGURE 1.6 JOB POSTINGS DECLINED BY 60 PERCENT, THE SHARE OF JOBS IN EXTRACTIVES ROSE WITH REFLECTING THE CHALLENGES IN THE PRIVATE THE EXPANSION OF THE OIL SECTOR SECTOR Labor market changes (%), Niger, 2021-2024 Employment structure (% of total), Niger, 2021-2024 30% 40% 36.5% 2024 20% 20% 10% 2023 0% 0% -11.4% -10.7% -20% 2022 -10% -40% 20% 2021 -59.5% -30% -60% 2021 2022 2023 2024 0% 20% 40% 60% 80% 100% Job seekers Job postings Other Public works and construction Number of jobs created Extractives Industry Social services Source: ANPE, World Bank staff Note: This graph only includes jobs registered with ANPE, representing jobseekers who have formally sought employment through the agency. The current account deficit narrowed to 6.2 The closure of the Niger-Benin border has percent of GDP, driven by oil exports, despite severely disrupted formal trade. The closure the disruption in trade routes and key exports, forced Niger to shift to and rely on longer and including uranium. more expensive transport routes, leading to lower trade volume, and disrupting uranium exports. The current account deficit narrowed in 2024 Although there is no official ban on uranium, due to the start of crude oil exports through the according to a government decree, official/formal Niger-Benin pipeline. The trade deficit improved export of gold and uranium dropped to zero in to 6.7 percent of GDP from 9.4 percent in 2023, 2024 due to the border closure.8 Also, license reflecting reduced imports and a large increase revocations by the government over claims in oil exports. The capital account balance is of delays in mines development led to halting expected to improve to 2.2 percent of GDP from production and export of accumulated stocks. 1.0 percent in 2023 due to resumed issuances Previously a major export, uranium contributed on the WAEMU bond market and external debt between 15 and 20 percent of Niger’s total drawings. exports from 2017 to 2023, amounting to CFAF 123.9 billion (US$194.7 million) in 2023. 8 By the end of April 2024, total domestic and external debt arrears reached CFAF 701.1 billion. Between April and June 2024, the government cleared CFAF 533.8 billion in arrears, most of which through reprofiling. However, progress slowed, and by October, new arrears reached CFAF 107 billion, leading to a net increase of CFAF 81.7 billion. This brought the total stock of arrears to CFAF 264.4 billion (2.2 percent of GDP). 15 The fiscal deficit narrowed to 4.3 percent Petroleum Corporation (CNPC), repayable over of GDP in 2024, but the debt risk rating was one year at 7 percent interest. The proceeds downgraded to high due to arrears and a were used to clear debt arrears and unlock sharp decline in revenue. additional financing for the government. The loan is scheduled to be repaid with up to 80 percent Government revenue in 2024 declined due of Niger’s share of oil exports. With Niger’s share to lower tax revenues—particularly trade- in oil exports estimated at 25 percent, the oil related, leading to cuts in capital expenditures. revenues available for the budget are limited. Total revenues are estimated at 9.3 percent of This situation has been further compounded by GDP, compared to the planned 14.4 percent. disruptions in oil exports due to repeated attacks The decline is linked to the Niger-Benin border on the pipeline. closure and disruptions in oil and uranium exports. In addition, grants have fallen sharply since The sharp revenue shortfall in combination the unconstitutional change in government, with a rapid accumulation of debt arrears led reaching 1.5 percent of GDP in 2024, compared the IMF and World Bank to jointly downgrade to an average of 6.3 percent over 2018-2022. In Niger’s debt sustainability risk rating from response, the government reduced expenditures moderate to high. The accumulation of debt to 13.6 percent of GDP, with capital expenditures arrears increased debt servicing requirements at 4.8 percent of GDP, just 54 percent of the to over 34 percent of domestic revenues and planned amount. Despite the lower revenue, the nearly 20 percent of total expenditure at the end rapid drop in expenditure narrowed the budget of December 2024 (Figure 1.7). Consequently, deficit to 4.3 percent of GDP, compared to 4.4 the joint Bank-Fund Debt Sustainability Analysis percent in 2024. approved in January 2025 assessed the overall risk of debt distress to be high. The downgrade Despite the commencement of large-scale is primarily attributed to lower revenues, which oil exports, Niger has yet to see a significant induced breaches in the external debt service- increase in oil revenue in the budget. In April to-revenue ratio threshold in 2024 and 2025, 2024, in anticipation of the start of crude oil although other debt indicators remain below exports, the government secured a US$400 their thresholds under the baseline scenario. million advance from the China National FIGURE 1.7 FIGURE 1.8 LOWER REVENUE COLLECTION LED TO CUTS IN THE DEBT SERVICING TO REVENUE RATIO SURGED CAPITAL EXPENDITURE IN 2024 IN 2024 TO 34.2 PERCENT Fiscal accounts (% of GDP), Niger, 2003 -2024 Debt service (% of revenue), Niger, 2010-2024 20 35% 30% 10 25% 20% 0 15% -3.2 -4.3 10% -5.4 -10 5% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 -20 2023 2024 Budget 2024 - realized Amortization Capital expenditures Current expenditures Interest Total Revenue (Incl. Grants) Budget deficit Debt service Source: MEF, World Bank staff 16 Financing conditions remained tight in 2024, term treasury bills (3-12 months). Only a fraction with limited external financing sources and of the offered 3-year bonds was subscribed to expensive domestic financing in 2024. The by investors. Meanwhile the average yield was government failed to raise all the amount put much higher compared to 2023, regardless of up for auction during issuances on the WAEMU the maturity (Figure 1.9 and Figure 1.10). financial market and most was raised as short- FIGURE 1.9 FIGURE 1.10 AMID HIGHER DEBT ISSUANCE IN 2024, AVERAGE NIGER PAYS MORE ON ITS DEBT THAN ALMOST YIELDS INCREASED ACCROSS THE BOARD ANY OTHER WAEMU COUNTRY Cost and volume of borrowing (% and millions of CFAF), Average yield over time, 12 months T-Bill, Niger Niger, 2024 12.5 Russia’s Invasion Regime ECOWAS Exit 900 000 12 of Ukraine change Announcement 800 000 10 700 000 10.0 Millions CFAF 600 000 8 Percent 500 000 6 400 000 Average Yield 300 000 4 7.5 200 000 2 100 000 0 0 3 6 12 24 36 60 84 120 5.0 Months 2022 Annual amount retained 2023 Annual amount retained 2.5 2024 Annual amount retained 2022 Annual average yield (RHS) 2018 2020 2022 2024 2023 Annual average yield (RHS) 2024 Annual average yield (RHS) Niger Other WAEMU Source: UMOA-titres, World Bank staff Sanctions, trade disruptions, and government The challenges in the banking sector have had arrears have put Niger’s banking sector in a negative impact on the private sector by a vulnerable position, hindering economic reducing bank lending capacity. Government recovery. arrears have contributed to an increase in the ratio of non-performing loans, reaching 24 The banking sector is facing a liquidity crunch percent by the end of September. Commercial and solvency risks have increased. The liquidity banks are exposed to risks from government challenge is driven by (a) a drop in deposits due arrears to suppliers who have received loans to the loss in consumer confidence in banks – from these banks to finance their orders and related to the lingering impacts of the WAEMU have been unable to repay their loans. Lower sanctions and to the current economic situation; deposits have affected banks’ lending to the (b) the border closure which has impacted private sector. By September 2024, banks’ liquid business borrowers involved in trade; and (c) assets had decreased by 62 percent compared the stock of government debt (arrears) to to July 2023, severely limiting their ability to commercial banks. Furthermore, between June lend, particularly to micro, small, and medium- 2023 and August 2024, the average solvency sized enterprises (MSMEs). New loans to the ratio in the banking system plummeted from private sector dropped by over 80 percent by 20.5 percent to 9.8 percent, falling below the November 2024. BCEAO’s required minimum of 11.5 percent, with several banks not meeting the regulatory norm. 17 FIGURE 1.11 FIGURE 1.12 THE RATIO OF NON-PERFORMING LOANS REACHED THE AVERAGE SOLVENCY RATIO IN NIGER 24 PERCENT BY THE END OF SEPTEMBER 2024 PLUMMETED FROM 20.5 PERCENT TO 9.8 Non-performing loans (% of total loans), Niger and WAEMU, Solvency ratio (%), Niger, 2020-2024 2023-2024 30 25 21.9 26.5 24.7 25 20 20 20.5 15 16.1 15 10 10 9.8 5 5 Mar-23 April-2023 May-2023 Jun-2023 Aug-2023 Sep-2023 Oct-2023 Nov-2023 Dec-2023 Fev-2024 Mar-2024 May-2024 Jun-2024 0 2020 2021 2022 2023 T1 2023 T2 2023 T3 2023 T4 2024 T1 2024 T2 2024 T3 Niger Average WAEMU Source: BCEAO and World Bank staff Despite elevated inflation and lingering According to a telephone survey of households effects of the sanctions, extreme poverty conducted in June 2024, urban households were decreased due to strong agricultural growth, more impacted by the ECOWAS sanctions.9 The but food insecurity worsened for the most survey revealed stops and substantial reduction vulnerable. in economic activities, which have adversely affected accessibility to essential social services The extreme poverty in 2024 is estimated due to restricted access, higher prices, and lower to have declined by 2.5 percentage points household incomes. Consequently, the living compared to 2023, due to strong agriculture conditions of Nigerien households deteriorated growth, leading to fewer people living in during the sanctions, contributing to a notable extreme poverty. Despite an elevated inflation increase in poverty, especially in urban areas. rate of 9.1 percent, driven by a notable 12.9 Based on households surveyed, it is estimated percent increase in food prices, robust economic that the sanctions led the poverty rate to growth, particularly in the agricultural sector, increase by 1.1 percentage points in Niamey and contributed to reducing the extreme poverty by 2.9 percentage points in other urban centers, rate to 45.3 percent (Figure 1.13). This reduction while rural areas experienced a decrease of 2.4 equates to over 270,000 fewer people living percentage points in poverty rate. in extreme poverty. However, poverty remains disproportionately higher in rural areas, with an extreme poverty rate of 52.2 percent, compared to 10.1 percent in urban areas. 9 Results are based on a household phone survey conducted in June 2024. 18 FIGURE 1.13 EXTREME POVERTY DECREASED AS GDP PER CAPITA GREW Poverty rate (%) Real GDP per capita (constant LCU) 120 380 000 370 000 100 360 000 80 350 000 60 340 000 330 000 40 320 000 20 310 000 0 300 000 2022 2023 2024 2025 2026 2027 International poverty rate Lower middle-income pov.rate Upper middle-income pov.rate Real GDP pc Source: World Bank staff estimates Floods in Niger led to loss of life, displacement, kits to affected communities. By October 2024, and rising food insecurity, underscoring the according to the Cadre Harmonisé, 1,534,548 compound effects of climate shocks, conflict, people (5.6 percent of the population) faced and economic pressures. Heavy rains caused food insecurity at phases 3 (Crisis) and 4 floods in parts of the country, affecting 161,142 (Emergency).10 Key drivers of food insecurity households (1,197,487 people) and causing 341 include conflict, climate shocks, and high food deaths as of September 2024. The government prices, exacerbated by trade disruptions. provided 7,026 tons of cereals and non-food 1.2 Spotlight: The Impact of Sanctions on Firms and Households The impact of the sanctions on private firms The survey results indicate that sanctions disrupted private firms’ activities but led to The National Statistical Office (INS) and the limited permanent and temporary closures. World Bank conducted a firm survey in June About 61 percent of firms cited sanctions as the 2024 to assess the impact of sanctions on main cause of disruptions, with 93 percent of the private sector. The survey, conducted by formal firms and ~60 percent of informal firms telephone, sampled firms from the 2022 General agreeing (Figure 1.15). Disruptions included Business Census (REGEN) database in Niger. trade barriers and reduced access to financing The database includes telephone data and other and services. Of the firms permanently closed, relevant information of Niger’s main companies. 58 percent had closed before the sanctions. The sample size was 2,500 companies (833 Additionally, 34 percent of temporarily closed formal and 1,667 informal). A total of 1,644 firms businesses had already closed temporarily responded (589 formal and 1,055 informal), before the sanctions. achieving a 67 percent response rate. A 50 percent margin was used to anticipate non- response. 10 WFP Niger Country Brief 19 FIGURE 1.14 FIGURE 1.15 MOST OF THE SURVEYED BUSINESSES ARE THE MAJORITY OF FORMAL BUSINESS WERE CATEGORIZED AS COMMERICAL AFFECTED BY THE SANCTIONS, INFORMAL BUSINESSES LESS Economic classification of firms interviewed (%), Niger, 2024 Proportion of perceived impact of sanctions on businesses (%), Niger, 2024 100 92.5 80 59.2 60.5 60 78.2 77.1 40.8 39.5 55.7 40 20 7.5 Formal Informal Overall 0 Industrial Agricultural Formal Informal Overall Commercial Service Artisanal Construction Non-affected activities Affected Activities Source: INS and World Bank staff estimates During the seven months of sanctions, reduced employment and investment. About 75.6 percent of surveyed firms in Niger 64.6 percent of businesses reported a negative experienced a significant drop in sales due to net outcome. Additionally, 48.8 percent of supply difficulties and fewer customers. This formal companies and 40.5 percent of informal included 80.1 percent of formal firms and 75.3 businesses estimated their sales had decreased percent of informal firms. Consequently, firms by 25 to 50 percent. FIGURE 1.16 FIGURE 1.17 THREE QUARTERS OF FIRMS REPORT INCREASING MORE THAN 40 PERCENT OF FIRMS REPORT A DROP FLUCTUATIONS DURING THE SANCTIONS IN SALES OF MORE THAN 50 PERCENT UNDER SANCTIONS Fluctuations in turnover during the sanctions (%), Niger, 2024 Magnitude of the drop in sales during the sanctions (%), Niger, 2024 100 100 12.1 13.8 13.7 80.1 80 75.3 75.6 80 20.5 29.4 29 60 60 40 40 48.8 40.5 40.9 20.9 20.7 20 17 20 2.9 3.8 3.7 18.6 16.3 16.4 0 0 Formal Informal Overall Formal Informal Overall Increasing Stable Decreasing 0-25% 25-50% 50-75% 75% and more Source: INS and World Bank staff estimates 20 The sanctions led to a reduction in employment, after the sanctions. However, these effects with no difference across formal and informal on employment are similar across formal and firms (Figure 1.18). Before the sanctions, only informal firms. Moreover, about 34.0 percent 8.2 percent of firms surveyed had reduced the of companies in overall estimate that the number of full-time employees. This proportion reduction in their full-time workforce is between rose to 21.7 percent after the sanctions. Similarly, 50 percent and 75 percent, which shows a before the sanctions, 12.7 percent of firms significant reduction in a third of the companies surveyed had reduced the number of part-time affected (Figure 1.19). employees, compared to 28.4 percent of firms FIGURE 1.18 FIGURE 1.19 FOR FORMAL AND INFORMAL FIRMS ALIKE, THE EMPLOYMENT OF MORE THAN HALF OF ALL EMPLOYMENT DECREASED, PARTICULARLY FOR FIRMS WAS SIGNIFICANTLY AFFECTED PART-TIME JOBS Fluctuations in the number of jobs (%), Niger, 2024 Magnitude of the drop in employment during the sanction (full time employees) (%), Niger, 2024 30 100 14.4 19.8 18.6 25 80 20 27.1 36 34 15 60 10 23 40 5 31.9 34.3 20 0 35.5 Formal Informal Overall Formal Informal Overall 15.5 9.9 0 Before sanctions After sanctions Formal Informal Overall Full-time job decreasing in number of workers 0-25% 25-50% 50-75% 75% and more Part-time job decreasing in number of workers Source: INS and World Bank staff estimates The impact of sanctions on investment was informal companies (53.3 percent) than among assessed by analyzing, among other things, the formal companies (36.6 percent). In addition, level of investments made by companies and 49.8 percent of firms that had experienced the fluctuations observed in these investments. a decline in investment during the sanctions More than half of the companies (52.4 percent) estimated that the decline was between 25 and felt that their level of investment had decreased 50 percent. since the sanctions began. The decline in investment was much more pronounced among 21 The impact of the sanctions on Niger surveyed, achieving an 83 percent response rate. households The sampling plan accounted for non-response by oversampling, ensuring representativeness. The World Bank and the National Statistical Office conducted a household phone survey to The results show significant reductions in analyze the socio-economic impact on Nigerien business operations and closures in the country, households following the July 26, 2023, political with disparities based on the socioeconomic events. The sample, a subset of the 2021-2022 and demographic characteristics of households. Harmonized Survey on Living Conditions of Survey data shows 43.1 percent of household Households (EHCVM 2) survey, was chosen heads continued their activities with reduced for its recent data on living conditions. A intensity, while 4.4 percent ceased activities stratified two-stage sampling method was used, altogether. Women, large households, urban considering Niamey, other urban centers, and households, and those in commercial activities rural areas. The strata considered were Niamey, are most affected. other urban centers, and rural areas. Of the 1,988 households drawn, 1,649 were effectively FIGURE 1.20 SANCTIONS LED TO REDUCED ACTIVITIES OF HEADS OF HOUSEHOLD PARTICULARLY OLD-AGED, IN URBAN AREAS, WITH LARGE FAMILIES, AND WORKING IN COMMERCE Effects of sanctions on activities by socioeconomic and demographic characteristics of households 60 53.8 49.1 44.9 46.5 46.7 43.1 42.9 42.9 44.2 43.7 44.7 40.9 42.5 42.2 40 38.5 43.7 Proportion of households (%) 33 20 7.2 8.0 8.1 6.8 5.8 6.6 5.7 4.4 4.0 3.6 4.6 4.2 3.5 2.2 3.3 0.2 1.2 0 All households Male Female Under 35 35 to 64 years old 65 years and ove 1 to 4 members 5 to 7 members 8 members and more Niamey Other urban areas Rural areas Commerce Transport Agriculture Personal servivces Construction Reduction in the activities of the head of household Cessation of activities of the head of household Source: INS and World Bank staff based on the June 2024 household phone survey Significant impacts on access to essential social rising prices for school supplies. The reduction in services are noted due to restricted access, household incomes due to sanctions is a major rising prices, and declining incomes. Among the factor, with 32.8 percent attributing difficulties 16.2 percent of households facing difficulties in to lack of liquidity. Similar issues are recorded in their children’s education, 68 percent cite lack access to healthcare, particularly medications. of money for school fees, and 45.1 percent face 22 FIGURE 1.21 SMALLER HOUSEHOLDS IN NIAMEY WORKING IN PERSONAL SERVICES ARE ESPECIALLY EXPOSED TO VARIOUS DIFFICULTIES, AS SCHOOL-RELATED EXPENDITURES TOOK THE STRONGEST HIT Households having encountered difficulties in educating their children by the type of difficulty (A) Lack of liquidity due to sanctions (B) Lack of money to pay tuition fees 60 100 57 56.3 93.4 91.8 88.7 79.9 81.3 80 75.6 77 75.6 74.6 44.2 67.9 66 67.8 39.8 39.3 64.1 40 37.9 37.2 62.2 60 56.1 32.8 32 33 51.9 52.9 31.7 Proportion of households (%) Proportion of households (%) 27.1 25.4 40 19.7 20 12.6 13.4 13.4 20 0 0 All households Male Female Under 35 35 to 64 years old 65 years and ove 1 to 4 members 5 to 7 members 8 members and more Niamey Other urban areas Rural areas Commerce Transport Agriculture Personal servivces Construction All households Male Female Under 35 35 to 64 years old 65 years and over 1 to 4 members 5 to 7 members 8 members and more Niamey Other urban areas Rural areas Commerce Transport Agriculture Personal servivces Construction (C) School supplies prices rise (D) School supplies not available 20 80 71.4 17.6 64.6 60 15 13.9 55.1 13.6 52.1 53.1 53.1 52.2 50.2 48.1 47.6 49.5 11 42.4 42.8 Proportion of households (%) Proportion of households (%) 40 38.3 10 35.6 8.6 8.4 7.9 7.7 7.4 6.9 25.3 20 5 4.1 2.9 7.3 1.9 2.1 2.1 1.3 0 0 0 All households Male Female Under 35 35 to 64 years old 65 years and over 1 to 4 members 5 to 7 members 8 members and more Niamey Other urban areas Rural areas Commerce Transport Agriculture Personal servivces Construction All households Male Female Under 35 35 to 64 years old 65 years and over 1 to 4 members 5 to 7 members 8 members and more Niamey Other urban areas Rural areas Commerce Transport Agriculture Personal servivces Construction Source: INS and World Bank staff based on the June 2024 household phone survey The household survey data confirms a observed across Niamey, other urban centers, significant increase in basic food prices and a and rural areas, especially during the lean season general decline in incomes. Market disruptions (June-September). The survey shows 75 percent from sanctions have led to over 90 percent price of households experienced a decrease in total hikes for essential goods like millet, maize, rice, income, with disparities based on socioeconomic wheat flour, pasta, sugar, and oil. This trend is and demographic characteristics. 23 FIGURE 1.22 HOUSEHOLD INCOME DECREASED FOR THREE QUARTERS OF HOUSEHOLDS ACROSS URBAN AND RURAL AREAS AND PROFESSIONS Evolution of household income following sanctions (A) By the gender of the household head and the place of residence (B) By sources of income 82.2 83.6 36.3 80 Family farming, livestock breeding or fishing 3.3 74.7 75.2 60.4 73.4 76 Non-agricultural family business 3.5 20.5 60.9 83 Transfers received from within the country 1.4 60 15.7 Proportion of households (%) 58.4 Transfers received from abroad 17 24.6 27 Paid employment of household members 2.4 70.5 40 72.3 33.3 Real estate income, investments or savings 9.7 18 39.7 NGO/Charity assistance 17.2 19.2 43.1 18.9 20 17.2 16.4 42.6 14.3 Government assistance 32.4 10.6 25 7.4 5.3 6.4 5.8 Pension 1.9 92.9 0 0 0 74.7 Total income 6.4 All households Male Female Niamey Other urban areas Rural areas 18.9 0 20 40 60 80 100 Decrease Increase Stagnation Source: INS and World Bank staff based on the June 2024 household phone survey 1.3 Economic and Poverty Outlook Economic growth is projected at 7.1 percent in to easing inflation in 2025. 2025, supported by the continued expansion of the oil sector, while inflation is expected to The budget deficit is expected to narrow to ease due to the good 2024 harvest season. 3.9 percent of GDP in 2025 from 4.3 percent of GDP in 2024, supported by a rebound Real GDP growth is projected at 7.1 percent in revenue, based on the World Bank’s in 2025, supported by very strong oil exports, assessment. Total revenue is expected to reach with production projected to reach 28 million 10.5 percent of GDP, driven by a rebound in tax barrels. The agricultural sector is projected to revenues due to the anticipated improvement grow by 5.7 percent, while the industrial sector in economic activities. Total expenditures are is set to maintain growth at 8.5 percent. Private expected to rise to 14.3 percent of GDP due to consumption is expected to expand by 3.1 improvements in government consumption and percent, supported by the good harvest in 2024, public investment. The fiscal deficit is projected and government consumption is anticipated to be financed through domestic/regional and to surge by 7.0 percent in 2025 supported by external borrowing. Public debt is expected to a rebound in revenue collection. Growth is gradually decrease from 44.5 percent of GDP projected to moderate to 5.1 percent in 2026 in 2025 to 41.9 percent in 2027, supported by and 4.5 percent in 2027, as the growth from the strong nominal GDP growth. oil sector fades. According to the 2025 budget law, total Inflationary pressures are expected to ease revenue is projected to reach 12.3 percent of due to increased food supply following a GDP, while expenditures are expected to reach strong 2024 harvest. Consumer price inflation 16.1 percent of GDP. This results in a budget is expected to ease to 5.3 percent and projected deficit of 3.8 percent of GDP. For a more detailed to reach the WAEMU criteria of 3 percent by presentation of the 2025 budget law, please 2027. The strong agricultural output during the refer to Annex 3.2. 2024 agricultural campaign will likely contribute 24 The extreme poverty rate is expected to production for exports, leading to lower growth. decline in 2025-2027, in line with real per A prolonged closure of the border with Benin capita GDP growth in agriculture, however would increase risks in the banking sectors, lead food security is expected to remain a to higher inflation, and disrupt private sector challenge. recovery. Over the period 2024-2027, the extreme There remain some uncertainties around the poverty rate, at the international line (US$2.15 movement of people and trade with ECOWAS 2017 PPP per person per day), is projected countries. Following the official withdrawal of to decline, in line with the strong baseline Burkina Faso, Mali and Niger from ECOWAS, agricultural growth projections. Assuming a six-month period was set to negotiate the strong growth in agriculture, the extreme poverty terms of the exit and post-exit relations. Gaps rate is expected to gradually decline to 36.2 in the agreement and unresolved tensions with percent by 2027. This represents a 9.1 percentage Benin beyond the border closure - could lead to point reduction from 2024 and a decrease of higher inflation and negatively affect revenue nearly 1.5 million people living in extreme poverty. collection. Interest rates on the country’s regional After high inflation of 9.1 percent in 2024, price bond market issuances have been higher since growth is expected to steadily decrease to 3 the announcement to leave ECOWAS and this percent by 2027. Meanwhile, real per capita GDP uncertainty could cause it to rise higher. A growth in agriculture, which makes up about 58 financing squeeze might force cuts in public percent of poor households’ income, is expected spending, limiting the government’s ability to to be significantly positive, reaching 5.4 percent provide basic services and delaying growth- in 2026. stimulating investments, which could harm Niger’s debt sustainability. Food insecurity is expected to remain a challenge while funding tightens. According The poverty outlook is also subject to significant to the Cadre Harmonisé, projections indicate uncertainties. First, the trajectory of poverty that between June and August 2025, 2.2 million will largely depend on policies that effectively people (8.1 percent of the population) will likely distribute oil and gas revenues to the broader fall into phases 3 or 4 of food insecurity, with population, especially the poor. This is particularly the most significant increases expected in the crucial when growth occurs in sectors that do not regions of Maradi (73 percent) and Dosso (55 directly employ people living in poverty. Second, percent). Meanwhile, the World Food Programme with nearly 80 percent of households primarily (WFP) may imminently halt food assistance for reliant on agricultural activities, they remain two million crisis-affected people in the Sahel highly susceptible to climatic shocks. Lastly, region due to US funding shortfalls. any deterioration in the security situation and a rise in internally displaced persons (IDPs) would The outlook remains subject to significant severely impede poverty alleviation efforts and downside risks, some upside risks, and aggravate Niger’s chronic food insecurity. uncertainties around the stability of the banking sector and regional trade. However, if security risks are contained, efforts to expand irrigation are successful, the border The sources of growth in the short-term remain with Benin is reopened and liquidity constraints narrow and subject to climate shocks, security in the banking sector are eased, growth could challenges and prolonged closure of the Benin- be higher. If the latest efforts to secure the Niger border. Although crude oil production has pipeline are successful, oil production could increased, agriculture remains the primary driver be higher than projected in the baseline and of GDP growth, but both sectors are constrained thus boost growth.11 Similarly, the government’s by climate variability and security challenges. A efforts to increase the importance of irrigated deterioration in the security situation could lead agriculture could reduce agriculture’s exposure to a decrease in cultivated areas and repeated to climate shocks. attacks on the pipeline would disrupt oil The government recently signed agreements with China to secure its oil installations. The agreement with China focuses on four key elements: (i) 11 ensuring optimum security for oil installations; (ii) deploying a robust and professional security system with adequate resources; (iii) establishing a collaborative framework to enhance coordination and operational efficiency; and (iv) fostering a long-term, mutually beneficial partnership. 25 Furthermore, given the importance of resistant crops, and sustainable practices, along agriculture to GDP and the persistent challenge with enhancing value chains through better with food security, it is crucial to strengthen infrastructure and market access, will reduce the agri-food system. Improving resilience to output volatility and boost GDP. climate shocks with better irrigation, drought- BOX 1.2 THE IMPACT OF ECONOMIC SANCTIONS AND GOVERNMENT MEASURES ON FOOD TRADE AND FOOD SECURITY Economic sanctions in 2023 disrupted food trade in Niger, causing inflation. The government responded by banning certain exports and implementing measures to boost agricultural production and reduce transportation costs. On July 26, 2023, ECOWAS and WAEMU imposed economic and financial sanctions that disrupted food trade in Niger. These sanctions reduced food supply due to the closure of borders with Nigeria and Benin, causing shortages of essential products such as rice and maize. As a result, annual food inflation reached 12.9 percent in September 2023 and 25.3 percent in June 2024. In September 2024, the government banned the export of rice, millet, and sorghum to ensure their availability in the domestic market and reduce speculation. Exemptions were granted to Niger’s allied countries, thus altering traditional trade routes. This measure disrupted regional trade networks, particularly with Nigeria and Chad, and reduced market opportunities for farmers and traders. Vulnerable households were particularly affected by the reduced supply and soaring prices, leading to increased food insecurity in regions such as Tillabéri, Diffa, Maradi, and Tahoua. Many households adopted negative coping strategies, such as reducing meals and consuming less nutritious foods, thereby exacerbating malnutrition. According to the November 2024 Cadre Harmonisé, 1.5 million people faced food insecurity in the last quarter of 2024, and this figure is expected to reach 2.2 million during the 2025 lean season. Food insecurity in 2024 was exacerbated by floods, security, and economic shocks, limiting access to sufficient food. To address these challenges, the government implemented several strategic measures. The Large-Scale Irrigation Program (PGI 2024-2027) aims to boost agricultural production by rehabilitating 10,000 hectares of existing irrigated land and developing 21,200 hectares of new land. The program targets an increase in agricultural production, particularly rice, with a goal of 313,000 tons. By the end of 2024, 4,000 hectares had been developed or rehabilitated at a cost of CFA francs 40 billion, funded by the Nigerien government and the Solidarity Fund for the Safeguard of the Homeland. Additionally, the government announced a reduction in fuel prices in July 2024 to lower transportation costs and the prices of essential goods. 26 FIGURE 1.23 SITUATION ON FOOD INSECURITY ESTIMATIONS (OCT.- DEC. 2024) AND PROJECTIONS (JUN.-AUG. 2025) Source: Communication sheet Cadre Harmonisé, November 2024 27 CHAPTER 2 2. STRENGTHENING THE AGRI-FOOD SYSTEM 2.1 Background and Overview Niger’s agricultural sector, critical for Despite its limited area, irrigated agriculture economic growth and employment, faces has increased agricultural production and challenges from climate change, political is rapidly expanding in regions with suitable instability, and economic variability. water availability. The agricultural sector continues to be a key, Although irrigated agriculture covers less albeit highly variable, driver of economic than 2 percent of the total cultivated area, it growth, food security, and poverty alleviation. contributes around one-third of agricultural The mostly rain-fed agricultural sector GDP. Over 95 percent of agricultural households contributes above 40 percent of the national cultivate less than 3 ha, mostly to meet their GDP and is the second largest source of foreign own needs. Major cultivated crops are staples, exchange, after extractive industries. The sector, including millet (some 46 percent of the total which is dominated by subsistence farms under area), sorghum (18 percent), and cowpea (32 mixed-crop production systems, providing jobs percent). Around 200,000 farming households, for some 80 percent of the population. The or about 8 percent of all farming households livelihoods of more than 90 percent of Niger’s and close to 2 million people, produce irrigated poor households rely on agriculture; as such, crops.13 The most important irrigated crops in the sector will and must continue to contribute terms of value are onions, mainly for export, strongly to inclusive economic growth in the and rice, mainly for local consumption. Most medium to long term and help achieve the irrigation occurs on small plots, averaging 1 ha government’s objective of reducing the poverty in small private irrigation and 0.25–0.50 ha on headcount to 20 percent by 2035. public perimeters. The performance of the agricultural sector Irrigation development is expanding steadily, is highly volatile, largely because of its though the full potential is yet to be realized. vulnerability to climate variability, which Irrigation is most widely practiced in the Tahoua is exacerbated by climate change. Niger is and Maradi regions, where 20,000 ha of land are one of the world’s countries most vulnerable currently irrigated, with expectations to double by to extreme droughts, floods, heatwaves, and 2027, primarily producing onions and tomatoes.14 desertification, resulting in debilitating impacts The Niger Valley follows, mainly producing rice, on crops, livestock, productive infrastructure, fruits and vegetables. Recent irrigation expansion and human settlements.12 Water scarcity, longer has occurred mainly in spatially separated dry seasons, extreme floods, and impacts of localities along the southern border areas with higher temperatures may also trigger new relatively high-water tables, additional areas conflict and forced migration, issues that already along the Niger River (especially for flooded rice), impact the region. By the 2050s, the median and several more northerly seasonal streams temperature could rise by 2.9°C and median (Figure 2.3). Most growth involves small-scale annual precipitation by 38 percent, reducing the drip irrigation for smallholders, largely financed production of several crops across the country. through the Climate Investment Funds, partially 12 World Bank (2022). Sahel Region Country Climate and Development Report (CCDR). World Bank, Washington, DC, http://hdl.handle.net/10986/37620. 13 Soumaila, Amadou (2021). Assessment of Farmer-Led Irrigation in Niger. World Bank and IFC, Washington, DC. 14 The Government launched the Large-Scale Irrigation Development Program (PDGI) in 2024, aiming to boost food security by irrigating some 21,000 hectares of additional plantations by 2027. Smaller scale initiatives are also underway, such as the Small-Scale Irrigation and Food Security Program (PISA), which aims to improve access to water to irrigation in the regions of Agadez, Tahoua and Tillabéri. 28 funded by IFC. Public and private investments in capacity building can enhance the sustainability rehabilitation, operations and maintenance, and and performance of irrigation development. FIGURE 2.1 FIGURE 2.2 THE AGRICULTURE SECTOR CONTRIBUTES AROUND REAL GDP PER CAPITA GROWTH IS HIGHLY 40 PERCENT TO GDP CORRELATED WITH AGRICULURAL OUTPUT Share of GDP by sector (%), Niger, 2000-2022 GDP and per capita growth (%), Niger, 2000-2022 50 40 45 30 40 20 35 30 10 25 0 20 -10 15 10 -20 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Agriculture Industry Services GDP per capita Agriculture Source: World Development Indicators, 2024 Note: The jump in 2022 was due to a base effect (from the contraction in output in 2021) and very favorable rainfall. Source: World Development Indicators, 2024; World Bank staff FIGURE 2.3 NIGER’S MAIN LIVELIHOOD ZONES ARE (AGRO-)PASTORALISM AND A RAINFED CEREAL BELT Source: FEWS NET 29 FIGURE 2.4 NIGER’S CROPLAND IS CONCENTRATED IN THE SOUTH AND LARGELY RAINFED Niger Cropland Irrigated Rainfed Source: Ministry of Agriculture 2021 Livestock plays a crucial role in agricultural Access to pasture and water is a major constraint production but encounters challenges such for the livestock sub-sector. In traditional as limited pasture, water scarcity, and the systems, animal feed comes mainly from natural impacts of climate change. pastures and, critically in Niger, crop residues.17 Livestock feed production, mainly for peri-urban Livestock contributes around 30 percent of the agriculture, is increasingly limited by expanded agricultural GDP and some 5 to 10 percent of the crop land use and climate change. These factors country’s export earnings.15 The national herd have reduced natural pasture productivity and was estimated in 2024 at more than 18 million have contributed to making crop residues into cattle, 35 million small ruminants (goats and an increasingly important feed source.18 Due to sheep), 2 million camels, and 19 million poultry. common fodder shortages, livestock managers About two-thirds of the ruminant livestock often exploit protected areas, or resort to forced population is raised under mixed crop-livestock livestock reduction. Expanded crop areas also production systems; the rest is produced under affect herd mobility, which brings the risk of pastoral systems characterized by extensive clashes between migratory herders and settled mobility, and under semi-intensive/intensive farmers. production systems. Most valuable in terms of export earnings are live animals, mainly cattle, exported primarily to Nigeria (about 90 percent) and Burkina Faso (8 percent), amounting to some US$23 million in 2022.16 15 World Bank (2024). Livestock and Agriculture Modernization Project (LAMP). Report No. PAD5422, World Bank, Washington DC [Herein this is referred to as the LAMP PAD Report.] 16 Some of the trade is informal, making official statistics uncertain. According to World Bank estimates for 2022, this US$23 million for cattle exceeded the US$13 million for crops (mainly onions and cowpeas). These exports are significant for the economy, although relatively small compared with uranium, petroleum, and gold (at around US$135 million, US$122 million and US$71 million, respectively). 17 McIntire, John, Robinson, Tim, and Bosire, Caroline (2020). “African Livestock Systems Research, 1975–2018,” In John McIntire and Delia Grace (eds) The Impact of the International Livestock Research Institute. Nairobi, Kenya: ILRI, and Wallingford, UK: CABI, pp. 515-600. 18 Amole, T., Ayantunde, A., Mulubrhan, B., and Adegbola, T.A. (2021). “Livestock feed resources in the West African Sahel.” Agronomy Journal 114(1), 26-45. 30 Production constraints, insecurity, and Over-reliance on cereal imports from reliance on imports contribute to chronic and neighboring countries threatens food security. short-term food insecurity in Niger As of October 2024, domestic cereal production for the 2023/24 marketing year was estimated Production constraints and insecurity at 5.3 Mt, with a domestic demand of 5.7 Mt, contribute to chronic and short-term food resulting in a deficit covered by imports: 200 insecurity. In Niger, food insecurity and kt of rice, 157 kt of coarse grains, and the rest malnutrition have two primary dimensions: mainly wheat.19 High transport costs limit (a) chronic or structural food insecurity, Niger’s access to global markets. In 2022, 75–85 which results from a structural national-level percent of millet and sorghum imports and 35 production deficit and household-level poverty; percent of maize imports came from Nigeria, and (b) short-term food insecurity, caused with additional imports from Benin, Mali, and by specific events that periodically affect the Burkina Faso. Over-reliance on these countries is country, certain regions, or population groups, risky due to droughts occurring simultaneously such as natural disasters, market disruptions, across borders. Production in Nigeria, Mali, and and conflicts. Food insecurity magnifies a Burkina Faso is also influenced by insecurity household’s vulnerability to economic risks. and policy changes, affecting cereal prices and Any shock to production or income can worsen availability in Niger. poverty by depleting households’ productive assets. 2.2 Key Challenges FIGURE 2.5 A SET OF FIVE KEY ISSUES BEST DESCRIBES THE CHALLENGES TO SUSTAINED AGRICULTURE GROWTH IN NIGER 1• Slow growth Growth in production has mainly come from expanding 5• Limited access to finance cultivated areas and raising According to data from FAOSTAT, the livestock numbers, with banks’ loan portfolio for agriculture limited land produc.vity and amounted to only US$15.61 million, quality gains. equivalent to 1 percent of the total outstanding loan porfolio. 2• Climate impacts The performance of the agricultural sector is highly volatile largely because of its vulnerability to climate variability, which is exacerbated by climate change. 4• Insecurity 3• Supply chains issues Rising conflicts in rural regions have Fragmented value chains and weak forced numerous farmers to abandon producer organizations continue to limit their agricultural lands. agricultural growth in Niger, despite ongoing development initiatives and collaborative e:orts to strengthen these systems. Source: World Bank staff 19 Cereal supply and demand balances for sub-Saharan African countries (October 2024). Available at FAO. 31 Niger faces slow agricultural growth and just 36 percent of the average for Sub-Saharan Africa increased climate impacts, with extreme (SSA) (Figure 2.7). The key constraints to improved weather affecting crop and livestock productivity include: (a) access to improved productivity technologies; (b) reliance on rainfed agriculture; (c) limited access to finance; (d) low public investment Niger’s agricultural growth is hindered by in agricultural research and development, and (e) low productivity, outdated technologies and high post-harvest losses and low value addition. practices, and inefficient systems. Production Comparable trends prevail in the livestock sector, growth has mainly come from expanding cultivated with significant discrepancies between potential and areas and raising livestock numbers, with limited actual productivity. The key constraints to livestock productivity and quality gains. Niger’s cereal yields, growth include poor husbandry practices, disease, averaging about 0.6 t/ha compared to a potential of antiquated slaughtering and meat processing 4 t/ha, lag those of neighboring countries, and are technologies, and ineffective food-safety systems.20 FIGURE 2.6 FIGURE 2.7 WHILE MOST CROPS GREW SLOWLY AT BEST, RICE AVERAGE CEREAL YIELDS IN NIGER ARE BELOW ALL YIELDS HAVE INCREASED STRONGLY SINCE 2000 PEERS AND THE REGIONAL AVERAGE Average yield of selected crops (t/ha), Niger, 2000–21 Average cereal yields (t/ha), Niger and peers, 2000-2020 5 2.0 4 1.5 3 1.0 2 0.5 1 0 0.0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Maize Rice Cowpea Burkina Faso Niger Nigeria Fonio Groundnut Millet Sub-Saharan Africa Mali Chad Source: FAOSTAT 2023 Source: World Bank The impact of climate change is already visible, across the country from year to year. Moreover, there with a continuous rise in temperatures of about has been a resurgence of extreme events in the past 1°C since the 1980s, the equivalent of 0.25°C two decades, including nine significant droughts and per decade. The number of extremely hot days several major floods (as recently as August 2024), has risen, excluding the high-elevation regions and which have heavily affected livelihoods, agricultural the extreme north. Annual rainfall has also increased production through destruction of productive assets, since the mid-2000s, yet the start of the rainy and increased food insecurity (Figure 2.8). season, its duration, and rainfall amount vary greatly 20 Management Entity (2022). The Livestock System in Niger – An Overview. Gainesville, FL, USA: Feed the Future Innovation Lab for Livestock Systems. 32 FIGURE 2.8 MAJOR CLIMATE SHOCKS HAVE SIGNIFICANTLY IMPACTED CEREAL AND CROP YIELDS OVER THE PAST TWO DECADES Agricultural production (2014-2016 = 100), Niger, 2000-2022 Drought 2021 140 Drought 2011 120 Drought + Locusts 2004 Drought 2009 100 80 60 40 20 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Cereals Crops Livestock Source: FAOSTAT 2023 Weak producer organizations hinder Niger’s of large commercial activities, in an increasingly agricultural growth despite efforts to complex social and economic environment. But the strengthen them through collaboration and set entities cannot create financial resources and development projects tend to rely heavily on outside aid. Furthermore, they face numerous challenges: (a) most are Fragmented value chains and weak producer too small (averaging fewer than 50 members) to organizations limit agricultural growth in Niger, function as commercial bodies; (b) leadership and despite ongoing development initiatives to membership often possess low literacy rates and strengthen these systems. The National Farmers’ insufficient administrative and managerial skills; and Platform of Niger (PFPN) plays a central role in the (c) lack of social control and poor governance further cooperative movement, identifying sector problems compromise effectiveness. and influencing policies. PFPN collaborates with the Network of Chambers of Agriculture (RECA) Lack of access to agriculture finance and for effective dialogue with the government. Major limited private sector participation result national producer federations, supported by the in low investment and value addition in the government and development projects, offer sector services such as input distribution and marketing. Specialized national umbrella organizations have Credit and lending to agriculture in Niger is established consultative frameworks and agricultural very small, both in absolute terms, and as a interprofessions, which unite value-chain players and share of the total lending from commercial mediate conflicts. However, most food items are still banks. According to data from FAOSTAT, the banks’ traded through informal markets. loan portfolio for agriculture amounted to only US$15.6 million, equivalent to 1 percent of the total Nigerien producer organizations are currently outstanding loan portfolio.21 Key constraints include: not fully effective. Most national federation (a) sector’s high perceived risks; (b) difficulties to organizations have experienced rapid growth, both in provide suitable collateral; and (c) financial products terms of membership and the variety of activities they and services that are ill-suited to farmers’ needs. This undertake, including sometimes the management reluctance of banks and microfinance institutions 21 The agricultural orientation index for credit, which is calculated by dividing agriculture’s share of bank lending by agriculture’s share of GDP, is the lowest in the WAEMU region. 33 towards lending has limited farm investments in Yet, the growing urban and export markets require more productive inputs and services. a different mix of products, including rice, fresh products, good quality meat and generally higher The agriculture sector is characterized by quality and processed products. Agro-processing limited and underdeveloped value-addition activities (such as slaughterhouses, dairy processing, and agro-processing, which places the sector’s rice mills) face major infrastructural limitations and offerings out of sync with the evolving market lack a consistent supply of raw materials. Over 85 demand. The structure of Niger’s agriculture has percent of the agricultural produce is for home changed very little over the last three decades, with consumption, indicating the need for increasing low value addition along the agriculture supply chain. marketable surplus. 2.3 Opportunities FIGURE 2.9 AGRIBUSINESS DEVELOPMENT, IRRIGATION, AND CLIMATE SMART PRACTICES OFFER OPPORTUNITIES TO BOOST PRODUCTION Agribusiness Development Climate Smart Agriculture Agro-processing is minimal in Niger, with The uptake of CSA technologies is very exports largely consisting of live animals and raw low. Lack of resources and skills are commodities,while processedfoodproductsare mostly among the key barriers to adoption and imported. The limited number of market focused agri- uptake of sustainable technology. food industries are mostly based in Niamey. Irrigation Low Hanging “Fruits” Niger has prioritized irrigation development, but Given the limited capacity of both farmers a large potential exists for expansion. There is a and government services, prioritycan be given need to rehabilitate thecurrent irrigation systems to to scaling up well-known, simple, low-cost increase efficiency, with due consideration to water sustainable land and water management and energy saving. practices. Source: World Bank staff illustration Agricultural transformation can be and achieve a middle-income economy by 2035. implemented through a phased approach The Resilience Program for the Safeguarding of the focused on boosting productivity and Nation 2024-202622 embodies the government’s improving access to resources and markets sectoral strategies for economic growth, food and nutrition security, environmental sustainability, and Niger’s development vision and strategy align crisis management. It also encompasses the Strategy with the perceived challenges and objectives and National Plan for Adaptation to Climate Change of the sector, stressing the importance of in the Agricultural Sector.23 growth, productivity, sustainability, and resilience. Niger’s long-term development strategy, A carefully targeted and phased approach Vision Niger 2035, focuses on opportunities for presents an opportunity to jump-start an sustainable and inclusive growth to alleviate poverty agricultural transformation. The initial phase can 22 As of January 2025, the program is in the process of adoption. 23 Republic of Niger (2020). “Strategy and National Plan for Adaptation to Climate Change in the Agricultural Sector [Stratégie et Plan National d’Adaptation Face Aux Changements Climatiques Dans Le Secteur Agricole (SPN2A 2020–2035).” 34 concentrate on the most profitable geographic areas Capitalizing on agricultural development with high potential for crop and livestock value-chain opportunities aligns with Niger’s climate growth and poverty reduction, such as those with the adaptation strategy. The Strategy and National Plan highest rainfall and best irrigation potential. These for Adaptation to Climate Change in the Agricultural areas are mainly in districts near the southern border. Sector 2020–2025 focuses on expanding irrigated Within these areas, there is an opportunity to focus areas and scaling up measures to enhance the on communities with good connectivity to major resilience of rain-fed farming systems. The measures consumption centers and significant agricultural include supporting the Great Green Wall Initiative, potential. Priority value chains can be selected based which spans 47 million hectares in the south, to on their growth impact, importance for food security, combat desertification, conserve biodiversity, and job creation potential, appeal to private investors, adapt agricultural systems to climate change. They climate change resilience, and the presence of also include promoting climate-smart agriculture existing organized value-chain groups. practices such as drought-resistant crops, soil fertility management, water harvesting, and agroforestry, Agribusiness and job creation can be especially farmer-managed natural regeneration. enhanced by leveraging private investments, better regulations, and infrastructure to boost Taking urgent action to mitigate future climate agribusiness development change damage can accelerate the adoption of climate-smart agriculture technologies. Despite There is an opportunity to boost agribusiness their benefits, adoption of CSA technologies has development in Niger through private been low and slow. Many of the widely adopted investments and improved regulatory CSA practices, such as those of localized water measures. Currently, agro-processing is minimal, capture, require few or no inputs except labor. The with exports largely consisting of live animals and uptake of more sophisticated agronomic practices raw commodities, while processed food products are faces several barriers, which are general constraints mostly imported. However, with the right incentives to sustainable agricultural growth. Prioritizing these and policy and regulatory measures, private constraints will enable to successfully implement investments can enhance agribusiness development, the government’s climate adaptation strategy in the reducing the import bill and creating jobs and value sector. addition. Key measures include secure land tenure systems, improved access to financial and de-risking Niger has progressively developed a services, and integrated agricultural value-chain comprehensive disaster risk management development. (DRM) framework to address recurring severe crises. The GoN’s DRM strategy is framed by its There is also an opportunity to boost agricultural Disaster Risk Reduction (DRR) Strategy 2015– productivity and financial inclusion through 2030, and the National Platform for Disaster Risk investments in key priority areas. The government, Reduction (NP-DRR) is responsible for coordination, through the High Council for Investment (since 2017) analysis, and advice on DRR issues. The National and the Guichet Unique du Commerce Exterieur Food Crisis Prevention and Management Mechanism (since 2018), has facilitated foreign engagement to (DNPGCCA), attached to the Prime Minister’s Office, support foreign direct investment and streamline is the government’s main instrument for managing trade procedures. The Food and Nutritional Security food crises. Despite facing financial problems, the Investment Fund, established in 2017, facilitates DNPGCCA has demonstrated its effectiveness. public and private investments, as well as research and advisory services for the agriculture sector. There is a significant opportunity to drive Additionally, the Financial Inclusion Development sustainable agricultural growth by improving Fund, launched in 2020, addresses access to finance access to irrigation for small and medium- issues. These initiatives can enhance productivity scale farmers. Prioritizing the promotion of small to by unlocking public and private investments in medium-scale irrigation systems, which require less irrigation, inputs, value chain development, producer public investment and collective management, can organizations, agricultural extension, and research. be highly effective. Focusing first on rehabilitating existing irrigation systems allows to capture the Expanding irrigation and promoting climate- benefit of previous investments. This benefit can smart agriculture practices are cornerstones be maximized with necessary reforms and capacity of the country’s adaptation strategy building, such as improving water management, operation and maintenance, Water User Associations, 35 and the governance and procurement of irrigation (such as the half-moons), agroforestry, and farmer- development. managed natural regeneration of pastures and forests. 24 Reaping low hanging fruits such as simple, low- cost sustainable practices and strengthening There is a significant opportunity to strengthen value chains and producer organizations can value chains and producer organizations to build help develop Niger’s agri-food system formal marketing and value addition channels. Key institutions and organizations are already in There is an opportunity to prioritize scaling place to support value chain development and up well-known, simple, low-cost sustainable boost agricultural productivity. Strengthening these land and water management practices, given organizations can further enhance their effectiveness the limited capacity of both farmers and and impact. The National Farmers’ Platform of Niger government services. Such practices must meet plays a central role in the cooperative movement, the following criteria: (a) potential to mitigate climate identifying sector problems and influencing policies. risks by reducing yield losses and volatility; (b) cost- This platform collaborates with the Network of effectiveness; (c) minimal institutional support Chambers of Agriculture for effective dialogue with requirements, featuring practices that farmers can the government. Major national producer federations, initiate largely on their own; and (d) co-benefits such supported by the government and development as reducing socio-economic or gender inequalities projects, offer services such as input distribution or creating new market opportunities. There is an and marketing. Additionally, specialized national opportunity to scale up ongoing adaptive practices umbrella organizations have established consultative that has shown to be generally effective in Niger, frameworks and agricultural interprofessions, which including integrated soil fertility management unite value-chain players and mediate conflicts. 2.4 Actionable Priorities FIGURE 2.10 PRIORITIZATION OF ACTIONABLE MEASURES WILL HELP BOOSTING THE SECTOR Strengthen applied Enhance tree planting Promote research program and other land small-scale on CSA management practices mechanization Continue ongoing Improve the capacity Integrate risk-transfer reforms og agricultural mechanisms in extension services adaptation strategies Source: World Bank staff illustration Specific reform actions can support against potential disease outbreaks, (b) ensuring adaptation measures and enhance agricultural better access to water and fodder, (c) facilitating performance in the medium to longer term. the conservation and transformation of animal Several reform actions for the livestock subsector resources, and (d) enhancing quality control and are being addressed through a World Bank-financed labeling services for animal products. The first six project (LAMP), approved in June 2024.25 These measures highlighted in Box 2.1 pertain mainly to the include: (a) increasing services to protect livestock to the primary agricultural production sector. 24 The efficiency and effectiveness of such measures are well understood in Niger, e.g., as reported by World Bank (2009). Republic of Niger: Impacts of Sustainable Land Management Programs on Land Management and Poverty in Niger. Report No. 48230-NE, World Bank, Washington, DC. 25 For details, please consult the Project Document that is available here: 36 BOX 2.1 POTENTIAL REFORM ACTIONS IN THE PRIMARY PRODUCTION SECTORS • Continue implementing the existing reforms to address constraints to agricultural investments. These reforms include ensuring land and water security rights and improving farmers’ access to the inputs and financial services. Adopting CSA technologies frequently involves up-front investments that pay off only over several years, and that can be helpfully encouraged by appropriate financial support through targeted subsidies and/or credit. Some of the work, such as creating soil-moisture retention structures and innovative solar and wind-powered mechanisms to lift water, might be best handled through an entity such as a Bureau of Reclamation, with accountability entrusted to responsible local officials. • Scale up agricultural research and development with a focus on climate smart seed production and CSA practices. This could involve producing improved plant and livestock materials that are more resilient to and tolerant of climate change and technologies well-adapted to farmers’ capacities and constraints. This could involve strengthening ongoing collaborations between the National Institute of Agronomic Research Institute (INRAN) with international research systems such as the Consultative Group on International Agricultural Research (CGIAR) institutes for improved technology. • Improve the capacity of agricultural extension services. They should be able to raise producer’s awareness about relevant CSA technologies. This may involve implementing a dedicated program of demonstration sites/centers to pilot and scale up climate-resilient technologies in different agro-climatic settings. • Explore mechanisms for more successfully executing tree planting and other land management practices. Such practices have large off-farm benefits that their direct implementors cannot fully appropriate. New schemes for payments for ecosystem services could be delivered through new structures in the public service that might be more efficient and socially secure executing mechanisms. • Integrate risk-transfer mechanisms in adaptation strategies to reduce climatic risk to producers. This may be done through appropriate instruments, such as insurance, addressing climate risks at various levels, from disasters of national scale to events affecting a limited number of individual producers. Niger already has several disaster-risk financing instruments in place, and new approaches should be informed by insights on the effectiveness of previous operations. • Small-scale mechanization can promote adaptation to climate change and increase farm profits through reduced labor costs. Effective adaptation to climate change necessitates more timely agricultural operations, particularly during the critical window of planting time when rainfall occurs. Mechanization along the agricultural value chain enables timely farm operations and can reduce labor costs, thus promoting adaptation to climate change and raising farm incomes. Innovations that might be considered include solar-powered village grain mills, donkey-drawn weeders, and group-shared tractors for tillage. Improving access to markets has large on much improved access to financial services, and economic growth potential. Niger’s export reduced transaction costs that are always difficult potential is significant considering the large regional to achieve and are especially demanding in a time and international markets to which it could be better of governmental transition. Progress in this domain connected. However, its growth remains hindered could be made quickly in the interventions supported by inadequate transport and market infrastructure. through ongoing operations, such as LAMP. Niger has one of the least developed infrastructures in Africa. Accessing international seaports requires Improving the quality of agricultural public some 70 percent more time and cost than the expenditures is vital for the agri-food sector’s SSA average, stemming from port inefficiencies, sustainability. The agriculture public expenditures lengthy customs processes, and substandard (AgPER)—9.7 percent of the total public expenditure transport services. Investments should be made in during 2018–22—suggest that Niger nearly achieved transport and market infrastructure, ICTs to improve the Comprehensive Africa Agriculture Development market information, and sanitary and phytosanitary Program (CAADP) commitment to allot 10 percent (SPS) standards to expand domestic and regional/ of the total national budget annually for agriculture. international market opportunities. Yet, nearly half of these expenditures were financed by donor support. The quality of AgPERs could be Boosting agricultural value addition will be improved by increasing allocation towards agriculture challenging. Agribusiness development will depend research and extension services. For instance, during 37 2018-2022, it was estimated that only 0.1 percent of A critical issue will be to enforce a much- Niger’s agricultural GDP was invested in agricultural improved management of pastoral land. The research and development Because agricultural Pastoral Law28, which is part of the broader Rural research and development, which is a tenth of the Code, (a) reaffirmed key principles such as the target set by the CAADP. The planning and budgeting northern limit of rain-fed cultivation and the herders’ processes could also be improved to better consider right to mobility; (b) clarified the procedures for the climate and other agricultural risks, and programs delimitation and protection of pastoral enclaves, to empower women and develop human resources passage corridors, water points, and livestock grazing across the value chains. Improvements could include areas; and (c) recognized that herders have specific the following: (a) strengthening the capacity of rights within their pastoral homesteads recognized government institutions responsible for planning by custom and where they usually stay for a large and implementing prioritized programs, for instance, part of the year. It also specified that the state cannot through performance-based management; (b) grant a private concession in a pastoral zone if this increasing decentralization of implementation; and decision will likely hinder pastoral mobility. (c) increasing coordination and monitoring by the many agencies involved in planning and execution. A long-term rural development could involve supporting the peaceful integration of migrating There is a need to improve both ex-ante risk herders into mixed crop-livestock systems mitigation and ex-post recovery assistance and encouraging more herders to pursue non- to put affected households on a sustainable agricultural ventures. However, many obstacles development path. Niger has developed a specific limit the effective application of this transition. agricultural risk management operational action plan These include growing monetization and private (PAGRA)26 that includes risk mitigation and adaptation appropriation of land, fodder, and water resources, measures addressing the major risks weighing on poor governance at the local level, and insecurity the agricultural sector. It provides a comprehensive that affects many rural areas. Priorities would be to framework for the Government’s food security reclaim and restore degraded rangelands, construct strategy. PAGRA’s total cost has been estimated at firewalls, and establish animal corridors to mitigate US$7.9 billion for 2014–2023. Its adequate financing clashes between farmers and pastoralists. should seemingly receive a high priority as there is more to be done, particularly for assisting the risk- bearing of pastoralists, as described in the Niger 2023 Economic Update.27 26 World Bank and HCI3N (2014). Plan d’Action pour la Gestion des Risques Agricoles au Niger (PAGRA). 27 World Bank (2023). Niger Economic Update: Special Chapter: Strengthening Financial Resilience of Pastoralists to Drought, World Bank, Washington, DC, April. 28 Pastoralism Ordinance, 2010. 38 ANNEX 3.1 Selected Economic, Fiscal and Poverty Indicators TABLE A.3.1 SELECTED ECONOMIC, FISCAL AND POVERTY INDICATORS, NIGER, 2022-2027 2022 2023 2024e 2025f 2026f 2027f Annual percentage change, unless otherwise indicated National Accounts GDP at constant prices 11.5 2.0 8.4 7.1 5.1 4.5 Private consumption 7.0 3.5 3.1 3.3 4.1 4.5 Public consumption -1.2 -7.0 -0.3 7.0 7.0 3.0 Investment 21.1 -10.4 -0.9 -3.5 2.7 2.3 Exports of goods and services 14.4 -8.1 48.5 42.5 11.2 8.5 Imports of goods and services 6.5 -12.0 -2.0 4.2 5.3 4.1 Agriculture 27.0 3.1 11.1 5.7 9.2 4.8 Industry -0.9 3.9 12.1 8.5 3.3 3.4 Services 4.9 0.1 3.3 8.0 1.3 4.9 Inflation GDP deflator 3.8 3.7 7.9 10.7 4.9 5.6 Consumer prices (average) 3.9 3.7 9.1 5.3 4.7 3.0 External sector Exports fob -4.7 -6.4 50.0 40.0 2.5 2.3 Imports fob 15.0 -6.2 4.2 3.0 3.0 3.0 Terms of trade 146.5 -0.4 -5.1 -1.4 -0.9 2.7 Percent of GDP, unless otherwise indicated Current account balance -9.8 -9.3 -6.2 -3.9 -4.2 -4.5 Foreign direct investment 3.9 3.2 1.5 1.7 1.7 1.6 Fiscal accounts Overall Fiscal Balance -6.8 -4.4 -4.3 -3.9 -3.4 -3.2 Primary Fiscal Balance -5.8 -3.2 -2.6 -2.7 -2.3 -2.3 Total Revenues and Grants 14.9 11.6 9.3 10.5 11.2 10.8 Tax Revenues 9.5 9.2 7.7 7.6 8.5 8.2 Taxes on Goods and Services 3.6 3.7 3.4 2.8 3.0 2.7 Direct Taxes 2.5 2.6 2.5 2.3 2.6 2.7 Taxes on International Trade 2.4 1.7 1.2 1.2 1.7 1.7 Non-tax revenues 0.0 0.0 0.0 0.0 0.0 0.0 Grants 4.7 1.7 1.5 2.2 2.1 1.9 Total expenditures 21.7 15.9 13.6 14.3 14.6 14.0 Current expenditures 10.1 9.6 8.9 8.7 8.8 8.3 Wages and compensation 3.6 3.6 3.2 2.9 2.8 2.6 Goods and services 1.4 1.1 0.9 1.0 1.1 1.1 Interest payments 1.2 1.4 1.8 1.4 1.3 1.1 Current transfers 3.7 3.1 2.6 2.1 2.0 1.9 Capital expenditures 11.6 6.3 4.8 5.6 5.8 5.7 Debt Public and publicly guaranteed debt 51.7 54.7 47.6 44.5 43.0 41.9 External government debt 32.5 34.5 28.0 26.7 26.1 25.6 Domestic government debt 19.3 20.2 19.6 17.8 16.9 16.4 Poverty International poverty rate ($2.15 in 2017 PPP) 48.1 47.8 45.3 40.6 38.2 35.8 LMIC poverty rate ($3.65 in 2017 PPP)1 81.7 81.5 80.4 77.4 76.2 74.3 UMIC poverty rate ($6.85 in 2017 PPP)1 95.5 95.4 95.3 94.0 93.8 93.4 Memorandum items GDP per capita (change in percent) 7.9 -1.3 4.9 3.7 1.8 1.3 Nominal GDP (CFAF, trillion) 9.6 10.1 11.8 14.0 15.5 17.1 Nominal GDP (USS, billion) 15.3 16.6 19.7 23.5 26.0 28.6 Source: Government of Niger and World Bank estimates as of March 10, 2025. Note: 1 LMIC refers to lower middle-income countries and UMIC to upper middle-income countries. 39 3.2 Analysis of the 2025 Budget The Government is implementing reforms through Expenditure Side: In the 2025 budget, total the 2025 budget to boost domestic revenues expenditure is expected to increase compared to and address the limited revenue mobilization the 2024 initial budget estimates, with nearly equal performance of the previous year. The government split between current and capital spending. Total aims to increase revenue through a series of tax expenditure is expected to reach CFAF 2,267.32 reform measures, including the elimination of several billion, or 16.1 percent of GDP, compared to CFAF tax exemptions. Notably, the two-year exemption 2,080.6 billion in the 2024 budget law, or 17.6 percent granted to new companies registered under the of GDP. Current expenditure is estimated to account synthetic tax regime will be removed, and online sales for 51 percent of total expenditure (8.2 percent of will now be subject to taxation. Additionally, while GDP), while capital expenditure is projected to some existing taxes will be maintained, others will constitute 49 percent of total expenditure (7.9 see an increase. These include the ISB rate for non- percent of GDP). residents, royalty rates, Tax Compliance Withholding (TCW), property tax, tax on discourtesy, and profit Budget Deficit Financing: The 2025 budget projects tax. the deficit as share of GDP at 3.8 percent, compared to 3.2 percent in the 2024 budget. The primary At the same time, the budget introduces new source of financing for the 2025 budget deficit will exemptions, which could undermine the revenue be external financing, amounting to CFAF 454.21 efforts at least to some extent. These exemptions billion, or 3.2 percent of GDP. This includes project include the minimum withholding tax, trade tax on loans of CFAF 261.61 billion (1.9 percent of GDP) and the importation of new vehicles for the transport of budget financing of CFAF 192.6 billion (1.4 percent goods or passengers, and VAT exemptions on the of GDP). In comparison, the 2024 budget included importation of items such as skimmed milk, potatoes, project loans of CFAF 206.9 billion (1.7 percent of manioc flour and powder, kerosene, butane gas, and GDP) and budget financing of CFAF 157.5 billion (1.3 fungicides, among others. percent of GDP). Domestic financing in the 2025 budget is expected to reach CFAF 283.84 billion, or Revenue Side: Total revenues (including grants) 2 percent of GDP, compared to CFAF 22.42 billion, are budgeted to reach CFAF 1,731.92 billion in or 0.2 percent of GDP, in the 2024 budget. Within 2025, equivalent to 12.3 percent of GDP. This is the 2025 budget, the banking sector will account for higher compared to the total revenue planned in 51.1 percent of domestic financing, while the non- the 2024 budget, which was CFAF 1,706.31 billion, banking sector will account for 48.9 percent. or 14.4 percent of GDP. Tax revenue constitutes the largest portion of the total revenue, accounting for Debt: Public debt has increased significantly over 64.8 percent (compared to 67 percent in the 2024 the last five years and remains high. It peaked at 54.7 initial budget), or 7.9 percent of GDP. Grants are the percent of GDP in 2023, fell to 47.6 percent in 2024, second most significant component, expected to and is expected to fall further to 44.5 percent in reach 25 percent of the total revenue in the 2025 2025 and then 41.9 percent by 2027. Niger will owe budget (compared to 26.6 percent in the 2024 initial CFAF 702.14 billion in treasury bills and bonds by budget), or 3 percent of GDP. Non-tax revenue 2025, representing 5 percent of GDP, with average and other revenue (special account) are projected rates of 10 percent. The increase in security spending to reach 9 percent (1.1 percent of GDP) and 1.2 has impacted social sectors, posing challenges percent (0.1 percent of GDP) of the total revenue, for poverty reduction given Niger’s low primary respectively. indicators. The State of Niger will owe CFAF 702.1 billion in Treasury Bonds and Treasury Bills for 2025, representing 5 percent of GDP, with high average rates of 10 percent for both securities. Additionally, increased security spending in recent years has adversely affected social sectors. This shift poses a significant challenge for poverty reduction, given Niger’s relatively low primary indicators. 40 FIGURE A.1 TABLE A.2 2025, THE BUDGET DEFICIT IS EXPECTED TO REACH BAT AND OAT MATURING IN 2025 REACH CFAF 3.8 PERCENT OF GDP 702.1 BILLION Budget balance (% of GDP), Niger, 2022-2025 20 Issuance Deadline Amounts Jan – Jul 2025 82 0 -3.2 -4.3 -3.8 Treasury Bond -6.8 -5.4 (OAT) Nov 2025 53.9 -20 Jan – Jul 2025 495.8 -40 Treasury bills (BAT) 2022 2023 Initial 2024 2025 Oct – Dec 2025 70.4 Budget -2023 Total Revenue (Incl. Grants) Total expenditures Total 702.1 Budget deficit FIGURE A.2 FIGURE A.3 DEBT SERVICING BECAME MORE IMPORTANT IN DEBT SERVICING BECAME MORE IMPORTANT IN 2024 REACHING 34.2 PERCENT OF TOTAL REVENUE 2024 REACHING 2.9 PERCENT OF GDP Debt service (% of revenue), Niger, 2010-2025 Debt service (% of GDP) Niger, 2010-2025 40% 3.5% 3.0% 30% 2.5% 2.0% 20% 1.5% 1.0% 10% 0.5% 0% 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Amortization Interest Debt repayment Amortization Interest Debt repayment 41 FIGURE A.4 FIGURE A.5 2025 BUDGET PROJECTS TOTAL EXPENDITURE THE WB PROJECTS TOTAL REVENUE AT 10.5 AT 16.1 PERCENT OF GDP AND REVENUE AT 12.3 PERCENT OF GDP AND EXPENDITURES AT 14.3 PERCENT PERCENT OF GDP IN 2025 Budget balance (% of GDP), Niger, 2022-2025 Projected budget balance (% of GDP) Niger, 2025 - 2027 15 20 10 5 10 0 -4.3 -3.8 -5 -5.4 0 -6.8 -3.8 -3.9 -3.4 -3.2 -10 -15 -10 -20 -25 -20 2022 2023 2024 2025 2025 2025 - WB 2026 - WB 2027 - WB Budget Budget estimation estimation estimation Taxe revenue Non-Taxe revenue Taxe revenue Non-Taxe revenue Other revenue Grants Other revenue Grants Current expenditures Capital expenditures Current expenditures Capital expenditures Budegt deficit Budegt deficit Source: Ministry of Finance, World Bank staff Source: World Bank staff 42 REFERENCES Agri Review (West Africa). 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