Coup aftermath leaves Niger economy in tatters

Sanctions and suspension of international finance and aid have left the economy of Niger, one of the world’s poorest countries, hanging by a thread three months after a July 26 military coup.

International financial support suspended

The European Union (EU), a key partner for the Sahel nation, had allocated 503 million euros (554 million dollars) “to improve  governance, education and sustainable growth” for Niamey from 2021-2024.

But the EU, France and other partners halted their budget support immediately after the overthrow of elected president Mohamed Bazoum.

Today Niger is estimated to be receiving financial support of 254 million dollars compared to 1,166 billion dollars before the coup, according to a study by the World Bank and World Food Programme.

Niger has received just 82 millions dollars or 0,55 per of GDP in development aid this year against the expected 625 million dollars (3,6 percent of GDP), the study found.

The figures from early October do not take into account the United States suspension of some 500 million dollars in aid to Niger.

Budget slashed

The EU says Niger has financed only 62 percent of its national budget through internal revenue.

The military regime announced at the start of the month a 40 percent cut in the 2023 budget due to “heavy sanctions imposed by international and regional organisations … exposing the country to a major drop in external and internal revenue”.

Sanctions by the Economic Community of West African States (ECOWAS) prevent Niger from propping up its budget and banking transactions via the regional financial market run by the West African Economic and Monetary Union (UEMOA).

The authorities in Niger have as a result demanded taxpayers pay cash rather than deposit money on a Treasury account which has been frozen by sanctions.

During the crisis, priority has been given to civil servant salaries to the detriment of public investment, said the WB.

Niger has missed several interest payments on loans which could “very probably” see the suspension of yet more international financial support, the bank said.

New infrastructure woes

Nigeria, which supplied 71 percent of Niger’s electricity before the coup, announced a halt to the service.

Niamey’s Nigelec company can today meet between a quarter and half of demand across the country, according to the WB, which added that the financial situation was deteriorating.

Several infrastructure projects have been put in jeopardy by the suspension of Western cooperation.

The commissioning of a 30 megawatt solar power plant at Gorou Banda, financed by the French Development Agency (AFD) and the EU has been delayed.

Work on the Kandadji dam, financed by the AFD, the West African Development Bank (BOAD) and ECOWAS’s investment bank (BIDC), has been halted.

For the WB the delays on electric infrastructure projects will inevitably hinder access to affordable and reliable power for homes and industry.

Economic slowdown

GDP growth had been projected at six percent for this year, boosted by oil exports.

It is likely to fall to 2,3 percent if sanctions remain in place to the end of 2023, the WB said.

And 700,000 more people could find themselves in extreme poverty.

The risk of a lack of liquidity has however eased with money transfer companies continuing to operate in Niger, despite sanctions.

The supply of funds to Niger are “limited” according to the bank but generally help the poorest.

Mali more ‘resilient’

Neighbouring Mali has faced similar economic sanctions from ECOWAS seeking a return to democratic rule in the aftermath of a 2020 coup.

The World Bank noted last April that Mali’s economy has proved “resilient” under sanctions.

The budget deficit has stabilised at five percent of GDP, a “high level” that has seen public investment suffer and poverty increase, the bank said.

– By: © Agence France-Presse