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Niger: Growing Economic Uncertainty Following the Coup

In the aftermath of the July 26th coup that removed in Niger the President Mohamed Bazoum from power, the country faces a bleak economic outlook marked by dwindling international funding and the weight of sanctions imposed by the Economic Community of West African States (ECOWAS).

Niger, one of the world’s poorest countries, heavily relies on international assistance to support its economy. The European Union (EU), a crucial partner for Niger, had pledged a substantial €503 million ($554 million) in funding from 2021 to 2024, aiming to enhance governance, education, and sustainable growth within the nation, as stated on its website. However, following the coup, the EU, in alignment with other international partners like France, swiftly halted its financial support.

Consequently, Niger’s budgetary support has seen a significant reduction, plummeting from a projected $1.166 billion to a mere $254 million, as stated in a joint study by the World Bank (WB) and the United Nations World Food Programme (WFP). For developmental projects, the disbursement is even bleaker, with only $82 million (equivalent to 0.55% of GDP) allocated in 2023, far below the expected $625 million (equivalent to 3.6% of GDP). This suspension is poised to have a detrimental impact on the nation’s ability to execute projects and manage its fiscal commitments.

These figures, as of early October, do not account for the suspension of Washington’s extensive support programs, amounting to approximately $500 million.

Niger heavily depends on domestic revenue for a mere 62% of its budget, according to EU figures

In October, the military regime took a drastic step, announcing a 40% reduction in the national budget for 2023. This decision was primarily attributed to the “severe sanctions imposed by international and regional organizations,” which threaten to plunge the nation into a financial crisis, jeopardizing both external and internal revenues.

The ECOWAS sanctions have barred Niger from accessing the regional financial market of the West African Economic and Monetary Union (WAEMU) for budgetary financing and other banking transactions. Consequently, the Nigerien authorities have called for taxpayers to settle their dues in cash, circumventing the frozen Treasury account. Faced with plummeting revenue, the government has opted to prioritize the payment of civil servant salaries, at the expense of public investments, as per the WB’s analysis. Furthermore, the new administration has defaulted on several interest payments, escalating arrears and potentially leading to the suspension of additional international financial support.

The suspension of electricity supply from neighboring Nigeria, which accounted for 71% of Niger’s consumption before the coup, has exacerbated the nation’s energy woes. The Niger electricity company (Nigelec) now struggles to meet a mere 25% to 50% of the demand, depending on the region. Moreover, various critical infrastructure projects are under threat due to the suspension of Western cooperation. Projects such as the Gorou Banda solar power plant, funded by the French Development Agency (AFD), have faced delays. Similarly, work on the Kandadji dam, financed by AFD, the West African Development Bank (BOAD), and the Ecowas Investment Bank (EBID), has ground to a halt.

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