The Nigerien economy is expected to rebound after a year marked by an unprecedented political crisis. Provided that exports of petroleum products can be maintained, according to the WB.
However, this rebound depends on favorable security and climatic conditions, as well as the continuation of oil production for exports, according to the latest economic update from the World Bank (WB) for Niger, published Tuesday.
The report analyzes recent economic and poverty trends in the country and provides a three-year outlook. In a specific chapter, it also analyzes the costs associated with improving access to quality primary and secondary education and offers some policy recommendations.
The report notes that the political crisis which followed the unconstitutional regime change of July 26, 2023 and the resulting trade and financial sanctions imposed by ECOWAS and UEMOA, considerably reduced GDP growth to 2%. Before the crisis, GDP growth had been projected at 6.9% for 2023 and was expected to reach 12% in 2024, thanks to large-scale oil exports via the pipeline which was commissioned at the end of the year 2023. Public spending has decreased due to the freezing of assets, the loss of regional financing and a significant reduction in external financing, which amounts to around 7.5% of GDP. Private investment also declined sharply in 2023 due to uncertainty and a liquidity crisis in the banking sector caused by financial sanctions.
« Despite the heavy sanctions imposed by ECOWAS in 2023, the Nigerien economy has demonstrated resilience, in part thanks to the proactive measures taken by the authorities. These measures allowed the government to continue paying public sector salaries and manage the energy crisis caused by the interruption of electricity imports from Nigeria. However, Niger’s economy remains fragile and largely depends on rain-fed agriculture, which exposes it to climatic shocks. Investing in human capital, particularly in education, is essential to achieving sustainable and inclusive growth said Han Fraeters, World Bank Country Director for Niger.
With the lifting of sanctions on February 24, 2024 and the partial restoration of financing, growth could rebound to 5.7% in 2024. This rebound would be driven by oil exports, while non-oil industries and service sectors, which suffered heavy losses in 2023, face a difficult recovery. The extreme poverty rate is expected to decrease between 2024 and 2026, reaching 42.5% by the end of 2026, in line with projected growth rates. This requires solid growth in agricultural production and effective use of increased oil revenues for the benefit of the population.
« While oil production and exports are expected to increase government revenue, they will also increase growth volatility. Additionally, it is a limited resource, and Niger’s oil reserves are expected to begin to decline in the mid-2030s if no new discoveries are made. It is therefore crucial to focus on increasing productivity by investing in sectors such as education said Samir Bandaogo, senior economist at the World Bank and co-author of the report.
And to add: “ The education sector faces many challenges and requires substantial investments. However, there are several options for financing the necessary additional spending without compromising fiscal sustainability. This includes improving the efficiency of spending in the education sector and strengthening the mobilization of domestic revenues, both oil and non-oil, to create additional fiscal space in a sustainable manner. »
WN/as/fss/Sf/te/APA
