Recurrent power cuts, drop in purchasing power, food shortages… After seven months of sanctions from the Economic Community of West African States (ECOWAS) imposed after the putsch of July 26, 2023, nothing in the streets of Niamey, the capital, does not suggest that Niger could experience the highest growth rate on the continent in 2024. However, according to a report from the African Development Bank (AfDB), published on March 1, the GDP of this country could jump 11.2% in 2024, following growth of 4.3% in 2023.
These “growth forecasts assume a gradual return to normal”, which includes “the lifting of sanctions [effective since February 24] and the return of financing”, tempers the World Bank. They are also based on the hypothesis of an export of 90,000 barrels of oil per day via the pipeline which connects the Agadem field to the port of Sèmè, in Benin, which should bring in around 610 million euros in revenue. tax revenue by 2025. Niger now exports 20,000 barrels per day. The Chinese company CNPC, in charge of the project, announced on March 2 the commissioning of the oil pipeline, allowing the release of the first barrels within two months.
However, the announced growth should be taken with caution, warns economist Emilie Laffiteau, associate researcher at the Institute of International and Strategic Relations (IRIS). “Niger is one of the poorest countries in the world. It is always easier to create a growth peak when you start from afar, she puts things into perspective straight away. Especially since the 11.2% growth will not necessarily have any effect on the long-term development of the country.
The need for structural reforms
“It is important to look at whether growth is due to a volume effect, in which case Niger has conquered new markets and is exporting more. Or if this rate is the consequence of a price effect. That is to say, the situation has not changed and the country is just benefiting from the rise in prices. In this case, compared to inflation in the country, this growth rate will have no positive effect on the populations,” indicates Emilie Laffiteau.
In the ADB forecasts, these two effects compete with each other. If Niger should significantly increase its crude export volumes, with the finalization of the pipeline, the global inflationary context, since the outbreak of the war in Ukraine, has minimized this gain.
According to various reports from the World Bank and the ADB, for the growth forecast to come true and become a lasting reality, the country must carry out structural reforms and turn more towards the secondary and tertiary sectors. As long as Niger has not initiated industrialization and depends mainly on its raw materials, the country will remain vulnerable to climatic shocks and variations in prices set by international markets. And although the performance of the tertiary sector increased in 2022, according to the ADB, it only represents a third of GDP. A share that risks falling with oil extraction.
Furthermore, “a high proportion of GDP is produced by the informal sector, mainly agricultural in the case of Niger”, also specifies Emilie Laffiteau. This does not allow the State to set up an effective public revenue mechanism. Especially since the export of uranium, of which Niger is the fourth largest producer in the world, represented only 6.52% of state revenue according to the latest report from the Extractive Industries Transparency Initiative in Niger (ITIE), due to low world prices of the metal.
A resource vulnerable to political shocks
Until the putsch led by General Tiani, 40% of the state budget depended, according to the military regime, on so-called non-domestic resources: donations or loans from foreign countries or institutions. A resource vulnerable to political shocks as was the case after the coup d’état, when the United States, France, the European Union, the World Bank and the West African Economic and Monetary Union (UEMOA) ended their partnership and the payment of development aid. Growth, desired and estimated at “7.9% on average between 2024 and 2026” by the junta, will therefore depend on Niger’s resilience to absorb all these exogenous shocks.
Some African economies have also understood this. Eleven of the twenty countries with the strongest economic growth in the world in 2024 are African, according to the AfDB ranking, and overall these forecasts “reflect countries’ efforts to diversify their economies and to implement national policies that reverse the increase in the cost of living and stimulate private consumption,” the report states.
Like Côte d’Ivoire or Benin, whose share of the primary sector in GDP represents less than 30% and which should experience growth above 6% in 2024, as has been the case since the recovery of economic activity after the Covid-19 pandemic. Driven by this structural change in economies, in 2023, the continent will be placed behind Asia in the ranking, established by the ADB, of the fastest growing regions. He is expected to repeat his second place in 2024.