Economy of niger

REPUBLIC OF NIGER

ECONOMY OF NIGER

• GDP (2006): $3.54 billion.
• Annual growth rate (2006): 4.8%.
• Per capita GDP (2006): $273.
• Avg. inflation rate (2006): 0.1%.
• Natural resources: Uranium, gold, oil, coal, iron, tin, and phosphates.
• Agriculture (27.9% of GDP): Products--millet, sorghum, cowpeas, peanuts, cotton, and rice.
• Industry (10.5% of GDP): Types--textiles, cement, soap, and beverages.
• Trade (2006): Exports (freight on board--f.o.b.)--$275 million. Types--uranium, livestock, gold, cowpeas, and onions.
• Major markets--France 34.8%, Nigeria 16.7%, Japan 13.3%, Spain 9.5%, U.S. 0.3%. Imports (f.o.b.)--$792 million. Types--consumer goods, petroleum, foodstuffs, and industrial products.
• Major suppliers--France 16.3%, China 13.1%, U.S. 7.1%, Nigeria 6.6%, Cote d'Ivoire 6.3%, India 4.7%, Japan 3.9%.

One of the poorest countries in the world, ranking last on the United Nations Human Development Index, Niger's economy is based largely on subsistence crops, livestock, and some of the world's largest uranium deposits. Traditional subsistence farming, herding, small trading, seasonal migration, and informal markets dominate an economy that generates few formal sector jobs.

Niger's agricultural and livestock sectors are the mainstay of all but 20% of the population. Fourteen percent of Niger's GDP is generated by livestock production--camels, goats, sheep, and cattle--said to support 29% of the population. The 15% of Niger's land that is arable is found mainly along its southern border with Nigeria. Rainfall varies and when insufficient, Niger has difficulty feeding its population and must rely on grain purchases and food aid to meet food requirements. In 2004 localized drought and locust infestations contributed to a drop in global harvests of 11% and led the Embassy to make a disaster declaration. This decrease, combined with chronic structural food insecurity, high malnutrition, and other market factors, triggered a food crisis which began in May-June of 2005. Although food security continues to be a concern, the food crisis has ended as a result of good cereal harvests in 2005, 2006, and 2007. Millet and sorghum are Niger's principal rain-fed subsistence crops. Cowpeas and onions are grown for commercial export, as are limited quantities of garlic, peppers, gum arabic, and sesame seeds.

In 2006, foreign exchange earnings from livestock (14.7%) were second only to those from uranium (55.4%), followed by gold (13.6%) and agricultural products (9.9%). Actual livestock exports far exceed official statistics, which often fail to detect large herds of animals informally crossing into Nigeria. Some hides and skins are exported, and some are transformed into handicrafts.

Recent global price increases have led to higher revenues for Niger's uranium sector, which provides approximately 55.4% of national export proceeds. The nation enjoyed substantial export earnings and rapid economic growth during the 1960s and 1970s; however, when the uranium-led boom ended in the early 1980s the economy stagnated. The French nuclear power concern AREVA owns controlling shares in Niger's two national mining companies. As a result of higher world prices in 2007, AREVA agreed to pay the Government of Niger double what it had been paying for uranium. In 2007 the U.S. public utility holding company Exelon Corporation signed a contract with the Government of Niger to buy 300 tons of uranium each year for the next 10 years. Although AREVA controls the only two existing uranium mines in Niger (COMINAK's underground mine and SOMAIR's open pit mine), in 2007 the Government of Niger awarded 122 new mineral exploration licenses to companies from France, China, Canada, Australia, India, South Africa, and the United States.

Exploitable deposits of gold are known to exist in Niger in the region between the Niger River and the border with Burkina Faso. On October 5, 2004 President Tandja announced the official opening of the Samira Hill Gold Mine in the region of Tera and the first Nigerien gold ingot was presented to him. This marked a historical moment for Niger as the Samira Hill Gold Mine represents the first commercial gold production in the country. Samira Hill is owned by a company called SML (Societe des Mines du Liptako), which is a joint venture between a Moroccan company--Societe SEMAFO Inc.--and a Canadian company--ETRUSCAN. Both companies own 80% (40% - 40%) of SML and the Government of Niger 20%. In 2006, gold was Niger's third most important export, accounting for 13.6% of the country's total exports. In 2007 the Anglo-American company Caracal Gold Burkina was awarded two permits to explore for gold in the Tillaberi region.

Niger has oil potential. In 2006 an ExxonMobil-Petronas joint venture ceased exploration activities at what may be Niger's largest oil deposit, the Agadem block, located north of Lake Chad. In 2007 nineteen companies vied for exploration and production rights to the Agadem block, but none of these bids were accepted. The Government of Niger was expected to award the Agadem block in 2008. The parastatal SONICHAR (Societe Nigerienne de Charbon) in Tchirozerine (north of Agadez) extracts coal from an open pit and fuels an electricity generating plant that supplies energy to the uranium mines. There are additional coal deposits southwest of the current mines. Substantial deposits of phosphates, iron, limestone, and gypsum also have been found in Niger.

Niger enjoyed increased economic competitiveness following the January 1994 devaluation of the Communaute Financiere Africaine (CFA) franc. Annual economic growth rates vary widely, due largely to the effect of rainfall on agricultural output. In 2005 the economy showed strong growth (7.1% real GDP growth) as a result of the agricultural sector's recovery from the poor harvests of 2004, and the continued growth of non-agricultural sectors. In 2006, the real GDP growth rate was at 5.1%.

The government actively seeks foreign private investment and considers it key to restoring economic growth and development. With the assistance of the United Nations Development Program (UNDP), it has undertaken a concerted effort to revitalize the private sector. It revised the investment code (1997 and 2000), petroleum code (1992 and 2007), and mining code (1993) aimed at attracting investors.

Niger shares a common currency, the CFA franc, and a common central bank, the Central Bank of West African States (BCEAO), with seven other members of the West African Monetary Union. The Treasury of the Government of France supplements the BCEAO's international reserves in order to maintain a fixed rate of 656 CFA to the euro.

Economic Reform In January 2000, Niger's newly elected government inherited serious financial and economic problems, including a virtually empty treasury, past-due salaries (11 months of arrears) and scholarship payments, increased debt, reduced revenue performance, and lower public investment. In December 2000, Niger qualified for enhanced debt relief under the International Monetary Fund (IMF) program for Highly Indebted Poor Countries (HIPC) and concluded an agreement with the Fund on a Poverty Reduction and Growth Facility (PRGF). In January 2001, Niger reached its decision point and subsequently reached its completion point in 2004. The debt relief provided under the enhanced HIPC initiative significantly reduces Niger's annual debt service obligations, freeing about $40 million per year over the coming years for expenditures on basic health care, primary education, HIV/AIDS prevention, rural infrastructure, and other programs geared at poverty reduction. Debt service as a percent of government revenue was slashed from nearly 44% in 1999 to 10.9% in 2003 and will average 4.3% during 2010-2019. The debt relief cut debt service as a percentage of export revenue from more than 23% to 8.4% in 2003, and decreases it to about 5% in later years. In 2005, the IMF canceled all of Niger's debts to it (approximately $111 million) incurred before January 2005. In 2006, the African Development Fund canceled $193 million in debt for Niger. Furthermore, the World Bank announced that approximately $745 million in debt relief for Niger would be phased in over the next 37 years.

In its effort to consolidate macroeconomic stability under the PRGF, the government is also taking action to reduce corruption, and as the result of a participatory process encompassing civil society, has devised a Poverty Reduction Strategy Plan that focuses on improving health, primary education, rural infrastructure, agricultural production, environmental protection, and judicial reform. In late 2006, Niger qualified for the Millennium Challenge Corporation's (MCC) Threshold Program. Niger will focus its MCC efforts on promoting girls' education, fighting corruption, and improving the business environment.

Under the auspices of the World Bank, the government launched a major privatization effort in 1998 to divest itself of monopolies in water, power, and telecommunications and to transfer other public enterprises to private sector management. In 2001 Niger successfully privatized its telecommunications monopoly; however, the privatization of other industries has stalled. The privatization of the state-owned electric utility (NIGELEC) and the national oil distribution company (SONIDEP) are on hold indefinitely.