Niger: Economic Outline

Economic Indicators

Niger's economy relies heavily on agriculture and is prone to instability due to climate-related shocks, resulting in fluctuating growth. Despite being a source of political stability in the Sahel since 2011, Niger faced challenges following a military coup on July 26, 2023. This led to extensive commercial and financial sanctions by ECOWAS and WAEMU, along with border closures lasting nearly 7 months and a halt in development assistance. In response, Niger, Burkina Faso, and Mali formed the "Alliance of Sahel States" (AES) in September 2023, aiming for security, military cooperation, and economic goals. On January 28, 2024, the three countries jointly announced their immediate withdrawal from ECOWAS through a shared communiqué. Concerning the economy, following an 11.5% increase in 2022, GDP growth decelerated to 1.2% in 2023 due to the freezing of government assets, the loss of access to the WAEMU regional bond market, and a significant reduction in external financing which caused a contraction in government spending. Following the lifting of sanctions in February 2024, growth is projected to bounce back to 6.9% (2.9% per capita) in 2024 and maintain an average of 4.5% over 2025-26. This surge will be propelled by substantial oil exports, although the non-oil industry and service sectors are expected to encounter difficulties in their recovery, as outlined by the World Bank.

The 2023 budget underwent revisions, with cuts to capital expenditures, leading to a reduction in the deficit to 3.9% of GDP, compared to 6.8% in 2022. Financial sanctions resulted in Niger defaulting on several debt repayments to government bondholders and international financial institutions. As of February 19, 2024, Niger owes CFAF 314 billion (USD 512 million or 3.1% of GDP) to bondholders, and Moody’s downgraded Niger's credit rating from B3 to Caa3. Public debt is projected to reach 54.5% of GDP, including arrears. Annual average inflation remained stable at 3.7% in 2023, after starting subdued in H1-2023 (average 1.2%), then rising sharply in H2-2023 (average 6.3%) due to food inflation from import disruptions. Inflation is anticipated to stay above 3% during 2024-26 as large-scale imports from the region resume, offset by higher import costs due to exiting the ECOWAS free trade area. The outlook carries substantial downside risks, such as a worsening security situation, terms of trade shocks, climatic disruptions, challenging financing conditions, and the withdrawal from ECOWAS. An uncoordinated exit from ECOWAS, causing disruptions to transportation, transit, and the free movement of goods, services, capital, and labor, could intensify adverse effects by spreading onto WAEMU trade.

Niger is one of the world’s poorest countries, and it has one of the highest demographic growth rates. The anticipated decline in overall and agriculture GDP per capita, coupled with a rise in food prices, is expected to escalate the poverty rate by 2 percentage points to 52.0% in 2023. Approximately 2.3 million individuals (8.9% of the population) were projected to be food insecure in Q4-2023, marking a 13% increase compared to Q4 2022, attributed to food inflation and localized food deficits. Additionally, an estimated 300,000 internally displaced persons due to insecurity, along with an equal number of refugees from Nigeria, Mali, and Burkina Faso, further contribute to the humanitarian challenges. The World Bank estimated that the official unemployment rate in Niger was around 0.5% in 2023; nevertheless, the figure is not reliable, and a good portion of the economy remains informal.

Monetary Indicators	2016	2017	2018	2019	2020
CFA Franc BCEAO (XOF) - Average Annual Exchange Rate For 1 GBP	800.68	749.15	741.42	732.38	737.93

Source: World Bank - Latest available data.

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Latest Update: May 2024