91604 IDA at Work Niger: Putting the Economy on a Path of Higher Growth N iger is a vast landlocked country in the Sahel, with an estimated 14.7 million people, the majority of whom live along a narrow band of arable land on the country’s southern border. Although endowed with precious mineral resources such as uranium, oil and gold, Niger is one of the poorest countries in the world with a gross domestic product (GDP) per capita of less than US$400. The economy of Niger currently depends essentially on agriculture, which accounts for about 45 percent of GDP. This primary sector is dominated by rain-fed agriculture, (though with an increasing focus on irrigation) with livestock production accounting for about a third of the value added in the sector. With some 80 percent of Niger’s population living in rural areas, rural development through transformation and modernization of agriculture sector is a priority if the country is to raise incomes and reduce poverty. Country Indicators 1998 2008 Real GDP growth (%) 12.6 9.5 Atlas gross national income (GNI) per capita (US $) 200 330 External debt (% GNI) 76.2 15.2 Debt service ratio (export/debt service) 23.7 2.8 Poverty incidence (%) 63 59.5 Gross primary school enrollment (%) 32.2 68 Gross secondary school enrollment (%) 10 16.1 Under-five child mortality (per 1,000) 274 198 Total fertility rate (births per woman) 7.3 7.0 Population (millions) 10.4 14.7 Sources: World Bank databases and Niger official data. After a decade (1990–2000) of political and Restoration of Democracy. A civilian transi- macroeconomic instability, Niger has expe- tion government has been appointed, and is rienced since 2000 a favorable environment moving towards a return to democracy, with for reforms, based on a national consensus new elections (presidential and legislative) that supported economic growth and laid the taking place before the end of January 2011. basis for reducing poverty. As a result, GDP growth averaged 4.8 percent between 2000 Macroeconomic and Fiscal and 2008. Niger however continues to face Performance Markedly difficult development challenges, including Improved in Recent Years a population growth rate of 3.3 percent per year (one of the highest in the world), recur- Niger’s economy is largely driven by rain-fed rent drought, political instability and weak agriculture, which is subject to strong volatil- human capital basis. ity due to droughts and other natural disas- ters, including locust plagues. In 2000–2008, The International Development Association GDP growth averaged 4.8 percent, versus (IDA) has been supporting Niger since 1964, 1.7 percent in 1960–1972; about 4 percent in starting with a road project designed to con- 1974–1982 during the uranium boom era; 0.1 nect cash crop regions with the main national percent in 1983–1990 when uranium prices and regional markets. Since then, IDA has sup- declined; and 2.6 percent in 1991–1999, a ported the country’s efforts to improve core period marked by political turmoil. basic service delivery in energy, water, basic education, and health. Several budget support Since 2000, improvements such as small-scale operations were also implemented that aimed irrigation have helped enhance productivity and to improve public sector management. institutional reforms within the rural sector. Country Achievements Fiscal space has increased since 2003 due to increased government revenues, the Niger gained its independence from France in debt relief from the Heavily Indebted Poor August 1960. Despite a military coup d’état Countries Initiative (HIPC) in 2004, and the in 1974, the country’s sociopolitical situation Multilateral Debt Relief Initiative (MDRI) in was relatively stable up until 1991. 2006. As a result, the country has been able to keep the basic budget deficit moderate, The 1990s however, were marked by social at 1.1 percent of GDP on average in 2005–07, unrest and two additional military coups in with no recourse to domestic financing. 1996 and 1999. After the assassination of Gen- eral Baré Mainassara in April 1999 and a nine- In addition, the deficit on the external month military transition led by Commander account has remained relatively low, around Daouda Mallam Wanke, Tandja Mamadou was 11–12 percent between 2007 and 2008. It democratically elected in November 1999 and may however, temporarily increase in the reelected in 2004. The government of Tandja next three years, due to a sharp increase Mamadou was overthrown in February 2010. in Foreign Direct Investments (FDI) related The acting head of state is now Major Salou to major projects in mining and oil, before Djibou, head of the Supreme Council for the returning to current levels mentioned above. 2 Public financial management has improved and donor assistance funds. To this end, in recent years, following implementation of the government must ensure that increased measures as part of the public expenditure national revenues, notably from uranium and management and financial accountability oil, are channeled to agriculture, education, review (PEMFAR) conducted by the Bank in health, and other priority areas. close collaboration with the government and other development partners. The government Streamlining the Public Sector and donors agreed on the following improve- ments in public financial management: (a) Public sector reforms implemented over adoption of the West African Economic and recent years allowed budget allocations Monetary Union (WAEMU) budget nomencla- to respond to medium-term government ture and its use in budget preparation and priorities (see Box 1). The reforms also execution; (b) preparation and dissemination improved budget execution, reduced dispari- of the organic budget law and government ties between voted and executed budgets, accounting and performance report; (c) secured priority expenditures, and strength- partial automation of the expenditure chain; ened internal and external controls. (d) compliance with funding Heavily Indebted Poor Country Initiative (HIPC) expenditure In addition, a strengthened national statisti- priorities; and (e) integration of a substantial cal information system improved the moni- share of externally financed expenditures in toring of social and economic indicators and the expenditure chain. allowed for an increase in the transparency and efficiency of the procurement process Progress towards the Millennium Develop- through the creation of a clear and account- ment Goals (MDGs) is predicated on effective able institutional framework. and efficient utilization of national resources Box 1. Improving Public Expenditure Management Niger’s progress in public expenditure management between 2000 and 2007 includes the following: • Adoption of a new budgetary nomenclature, public accounts charter, and a new procurement law; • Introduction of a Financial Management Information System (FMIS), the setting up of a treasury-budget computer interface, and computerization of regional treasury offices; • A comprehensive assessment of Niger’s public financial management systems through a donor-supported PEMFAR, with assistance from the European Union (EU) and the Bank, and adoption of an action plan; • The preparation and incorporation into the budget of medium-term expenditure frameworks for health and education; • Adoption of a unified list of priority expenditures; • Effective establishment of the new General Directorate for Public Procurement; • Creation of an independent Audit Court; • Separation of financial control, training of agents, and appointment of staff to the new independent Audit Court. Despite these actions, a significant number of actions are needed to strengthen public expenditure management further. 3 Making Gains in Health support community development; improved access and quality of basic education; reform Improving the health status and meeting the and restructuring of the financial sector; health-related MDGs in Niger are formidable health sector and institutional strengthening; tasks given the country’s modest economic natural disaster management; and emergency growth, limited public funding, widespread food security support to mitigate the impact poverty, poor health status, extremely high of food price hikes. fertility rate, and mostly poor and sparse population. Policy reforms to support improvements in public expenditure management are sup- Despite these constraints, Niger has managed ported through a series of development policy to make gains in health by reducing the infant operations, the first of which was approved in mortality rate by nearly 20 percent over the fiscal year (FY) 2006 (Rural and Social Sector past decade: 123 per 1,000 in 1998 compared Policy Reform); the second was approved on to 81.4 per 1,000 in 2006. The under-five June 19, 2007; and the third was approved on mortality rate went from 274 per 1,000 in March 24, 2009 (Growth Policy Reform Grant). 1998 to 198 per 1,000 in 2006. Still, Niger’s health outcomes are modest compared to A new Country Assistance Strategy (CAS) other Sub-Saharan African countries. The covering FY2008–2011 was approved on May chronic child malnutrition rate approaches 29, 2008. 49 percent and the maternal mortality rate averages 648 per 100,000 live births accord- IDA’s Impact in Niger ing to the Demographic and Health Survey Spans Many Sectors (DHS) of 2006. Agriculture and rural development. Over The prevalence rate of HIV/AIDS among the the past decade, the World Bank has led adult population from 15 to 49 years old is donor support to Niger’s agriculture and estimated to be 0.7 percent, which translates rural development sector through an array to about 91,000 seropositive persons nation- of analysis and projects. Along with other wide. There are strong differences between partners, the Bank helped the government the regions, where the prevalence rates vary prepare a comprehensive Rural Development from 0.5 percent in rural areas to 1.5 percent Strategy and is supporting implementation of in urban areas, according to the 2006 DHS. the key pillars of the strategy. This data suggests that, despite the chal- lenges, further progress is possible. The first phase of the Community Action Program (PAC) successfully addressed food Ida Contributions security and non-farm income-generating activities in rural areas through a community- The current IDA portfolio of about US$349 driven approach, which is being expanded million supports investments in water infra- under an ongoing second phase of PAC, put- structure; rural development, promotion of ting further emphasis on support to decen- agricultural exports and irrigation; HIV/AIDS; tralization (164 communes compared to 54 a nationwide community action program to during the first phase) and sustainable land 4 management. The Second Private Irrigation recommended dose of fertilizer and improved Promotion Project (PIP2) helped expand cultivation practices, more than doubling small-scale irrigation systems and technolo- yields per hectare to 5.4 tons on average over gies across the country (see Box 2 below). It the project area, from 2.5 tons per hectare. demonstrated that such investments can be Similarly, Niger benefited from an IDA grant in profitable and can measurably improve farm- December 2007 to improve its preparedness ers’ welfare. The Agro-sylvo-pastoral Exports to address the avian flu threat. and Markets Development Project (PRODEX), conceived to upscale achievements of the Public sector management. Since 2000, IDA PIP2, is under implementation. PRODEX also has supported reforms through a series of aims at supporting development of key sup- development policy operations, economic ply chains of onion (totally irrigated crop), sector work related to PEMFAR, a country cowpeas and livestock. Separate projects economic memorandum on sources of aim to: link farmers to markets and improve growth, an investment climate assessment, transport services for commerce; strengthen and a Diagnostic Trade Integration Study. The rural finance; and support policy measures to reports helped authorities to frame their sec- increase competition in the agriculture input ond Poverty Reduction Strategy Paper (PRSP markets. II) in 2007. IDA encouraged donors to support the upgrade of the public procurement sys- The Bank also provided support to the tem and the national statistical information country amid the global food price crisis in system. The statistical bureau is now one of 2008 through the Emergency Food Security the most efficient in the sub-region after lag- Support Project under the Food Price Crisis ging behind for decades. Response Trust Fund, which helped procure 4,000 metric tons of fertilizers on fast track Health. Niger has adopted a five-year procedures that were distributed at subsi- National Health Development Plan (NHDP) for dized prices to rice producer cooperatives. 2005–2010 that aims to reduce the maternal Over 9,000 hectares were treated with the and child morbidity and mortality. In order Box 2. Getting the Best out of Fragile and Scarce Water Resources The decision to emphasize the role of the private sector and to favor small-scale irrigation rather than large- scale schemes was a strategic choice that helped achieve national objectives. The development objective of the Second Phase of Private Irrigation Project (PIP2), closed in December 2008, was to increase production and profitability of high-value, irrigated crops by private, smallholder farmers with simple, low-cost technologies. Building on lessons learned from a pilot phase, this second phase sought to develop improved low-cost technologies (mainly manual/motor pumps and tube wells in addition to various irrigation techniques), and disseminate them to smallholder farmers, along with a supporting package of training and financial and technical assistance. Extension and advisory services capacity was enhanced at the local level. Productivity and revenues of participating farmers were increased by more than fivefold. In all, 10,904 hectares of consolidated irrigated areas and 5,491 hectares of new irrigated areas were created and led to a steady increase of crop yields by at least 50 percent for onions, peppers, tomatoes, and rice. 5 to improve the effectiveness of their aid, IDA Niger is a vast country. The spread of the and other donors have been providing support population over a wide geographical area, while establishing sector-wide approaches in along with the requirement for international the health sector. A partnership agreement road connectivity, have resulted in a large with all donors has been signed and an Memo- road infrastructure network. The road length randum of Understanding has been endorsed per inhabitant is thus one of the highest in between the Agence Française de Développe- Africa, which makes the prioritization of ment (AFD), the Ministry of Health and IDA in its maintenance and rehabilitation all the order to implement the health plan through more important given the scarce resources. a pooling of funds, with a direct transfer of Between 2009 and 2012, IDA will finance the resources to regions and health districts on rehabilitation of about 1,000 kilometers of the basis of an agreed annual work plan. selected unpaved sections of the national road network, connecting agricultural production To sustain the effort toward the objective zones to domestic and international markets of the NHDP, the government adopted free in the southwestern and southern rural areas. services measures in 2007. These regulations That represents about 10 percent of Niger’s supported the full subsidization of contracep- road network classified as “primary.” tives, caesarean sections, pre-natal consulta- tions, and health care for children under five. Public financial management. In view of The measures so far have increased the use expected increased revenues, particularly of the health centers (from 20 percent in from the mining and oil sector, the Ministry 2005 to 39 percent in 2009), but more effort of Economy and Finance has asked IDA to is required to improve the quality of health provide assistance to strengthen, modernize, services as well as to extend the availability and reform its ministry to build the capac- of services. ity required to implement public finance management reforms. On July 2, 2009, IDA IDA has been the single largest source of fund- approved a Reform Management and Techni- ing (US$25 million) for HIV/AIDS prevention, cal Assistance Grant of US$10 million. mitigation and care over the past five years and a second project is in the pipeline. Urban sector. IDA has been involved in the urban development sector in Niger for more Roads. IDA’s support to Niger’s transport than 10 years. Lessons learned demonstrate sector program is helping address some criti- the importance of sustainable urban infra- cal needs in the road sector, including: the structure services to reinforce the decentral- development of a sustainable road manage- ization framework. ment and financing mechanism; support to the institutional development of the sector; The first urban sector IDA-supported opera- and periodic maintenance and rehabilitation tion in 1997 involved the local private sector of unpaved roads that would contribute to and investments that helped alleviate poverty improving the physical access of the rural and generate employment (1.2 million person- population to markets and services in densely days of temporary employment). The project populated areas. also contributed to better management of the urban sector through the development of 6 urban investment tools. Some of these tools In rural areas, only 52 percent of households were further endorsed in 2008 by the Parlia- have reasonable access to clean water ment of Niger through the Loi d’Orientation through boreholes and open wells equipped sur l’Urbanisme et l’Aménagement Foncier with hand pumps and small piped systems. It is (LOUAF). estimated that more than 30 percent of rural water facilities are not operating properly; The Local Infrastructure Development Proj- this rate may vary depending on the pace of ect, approved in May 2008, is deepening the episodic rehabilitation programs, which are decentralization process in Niger with regard carried out in lieu of systematic maintenance. to urban development and management. In sanitation, progress lags even further. Only Major studies will be undertaken in support 35 percent of urban households have access of targeted national policies. Overall, the to latrines, while in rural areas the record is project is expected to strengthen capacity dismal, with just 5 percent having access to in local government, the private sector, and latrines. These shortfalls have a major nega- civil society, with the goal of further improv- tive impact on public health. ing local governance through better transpar- ency and accountability in the management A US$50 million IDA project in FY2011 will of local affairs. continue to support government efforts to achieve water and sanitation MDGs while Water and sanitation. In recent years, Niger strengthening the urban water reform. has made substantial progress in delivering water and sanitation services—yet still faces Financial sector. IDA has been engaged in major challenges for reaching MDGs levels financial sector development in Niger since and the quality of service provision. In the 2004 through a Financial Sector Development country’s 51 urban centers, about 72 percent Project that aims to improve the efficiency, of the population was served through 103,000 reach, and depth of the Niger financial system private connections and 2,870 standpipes as of in order to contribute to growth and poverty December 2008—up from 64 percent in 2001. reduction. The urban water demand is expected to grow by 30 percent over the next decade. With the Despite slow implementation, some achieve- support of IDA, an ambitious urban water sec- ments in the banking sector are worth noting, tor reform was launched in 2001 through the including the restructuring of four banks. Two Water Sector Project. After seven years of banks, Banque Commerciale du Niger (BCN) implementation, the reform has significantly and Banque Islamique du Niger pour le Com- improved the overall management as well as merce et l’Investissement (BINCI), have been the quality of service delivery, efficiency of recapitalized and restructured and are now operations, and cost recovery. The financial solvent and liquid. Final restructuring and equilibrium of the urban water sub-sector privatization of the housing bank Crédit du was restored in December 2006. Since then, Niger (CDN), and the local communities’ bank the sector has been able to recover its capital Caisse de Prêts aux Collectivités Territoriales costs as well as operation and maintenance (CPCT) should allow these two institutions to (O&M) costs from consumers’ tariffs without resume their operations and increase access government subsidy. to financial services for more clients. 7 The postal bank in Niger has the largest and provide advisory services that will pro- branch network (45 branches throughout the pel agribusiness, access to finance, and the country) and presents good prospects for mining sector. A key overarching focus area increasing financial access for low-income will be the business-enabling environment. populations in remote areas. However, the On the advisory front, IFC intends to assist Post Office is now trapped in a “vicious circle” the government in introducing private sector of low investments that result in poor quality participation in agribusiness to leverage the services and declining market share, and pre- country’s comparative advantage in specific vent it from unlocking its potential. Technical vegetables. assistance provided during the first two years of the project have recommended spinning off Challenges Ahead the financial services from the postal services and establishing a postal bank (FINAPOSTE) Niger faces formidable challenges. The coun- as a subsidiary that would provide financial try is confronted by a harsh climate, with services to the public through the Post Office nearly 90 percent of the territory receiving network in urban, peri-urban, and rural less than 350 mm of rain every year, result- areas. Ultimately, the largest impact of the ing in regular droughts. The country must project would be felt once the restructuring adapt to the gradual advance of the Sahara of NigerPoste and creation of the postal bank Desert and manage locust invasions. Due to a (FINAPOSTE) come to fruition. combination of geography, weak policies and lack of resources, one-third of the population Partnerships faces chronic food insecurity. The year 2010 has been particularly bad - with 3.5 million The Bank and the United Nations Development facing extreme malnutrition, a huge deficit in Programme (UNDP) co-chair the Development animal foodstuffs posing grave consequences Assistance Group (DAG), the main forum for for livestock and herder livelihoods, a 20 donor coordination in Niger, which includes percent increase in food prices, and acute 15 bilateral and multilateral agencies. Under malnutrition standing at 12.3 percent nation- the DAG, efforts are underway to accelerate wide. The government, development agencies progress with the implementation of commit- (including the World Bank, other multilateral ments under the Paris Declaration. Much of and bilateral agencies) and humanitarian the collective effort is focused on increasing organizations are coordinating a response to harmonization through initiatives that pro- the crisis through the Food Crisis Prevention mote dialogue or support programs in critical and Management Framework Agreement, but sectors of Niger’s development agenda. Key longer-term solutions are also needed. donors supported the preparation of sector strategies in education, health, rural devel- Despite being a sparsely populated country, opment and transport, and co-financed the Niger’s total fertility rate is one of the highest multi-year investment programs in health in the world and the population growth rate is and education. one of the fastest in the world at around 3.3 percent. This has placed increased pressure The International Finance Corporation’s on arable land, water resources and govern- (IFC) strategy is to support viable projects ment services, particularly along the fertile 8 southern border areas where the majority of Niger’s economic prospects in the mining and the population lives. The government is aware oil sectors are promising. The actual trend of that economic growth and demographic weak revenue collection may be improved in issues must be addressed in order to raise the the medium term when a new uranium mine country’s development prospects and reduce and an oil refinery come on line. Niger needs poverty. to use additional resources efficiently and transparently in order to diversify the sources Although Niger stands among the world’s of growth. poorest countries, there are recent indica- tions of improved access to basic education In that regard, a second public expenditure and better health outcomes, showing gov- management and financial accountability ernment efforts, supported by development review (PEMFAR II) under preparation will partners, are beginning to have results. assess the fiscal space potentially created by the uranium and oil sector’s revenues, But, more efforts are needed to meet the assess Niger’s institutional capacity to man- international development goals. Specifically, age price/fiscal volatility and identify actions for substantially reducing poverty, a sustained needed to enhance transparency of oil and economic growth of 7 percent is required uranium revenue. over the medium term. Achieving such a high growth rate requires accelerated investment Last updated September 2010. in infrastructure and basic services, and more http://www.worldbank.org/ida private sector investments. 9