|Select Economic and Financial Indicators||2014||2015||2016||2017e||2018f|
|Real GDP (% change)||7.5||4.0||5.0||5.2||5.2|
|GDP (USD bn)||8.2||7.2||7.5||7.9||8.6|
|Fiscal Balance (% GDP)||-8.0||-9.1||-6.2||-5.4||-5.0|
|Broad Money (% change, end period)||25.7||3.6||8.5||10.7||10.7|
|Exports (USD bn)||1.7||1.3||1.3||1.3||1.5|
|Imports (USD bn)||3.2||2.9||2.8||3.1||3.4|
|Current Account Balance (% GDP)||-15.4||-18.0||-15.5||-15.3||-15.0|
|FX Reserves (USD bn, end period)||1.2||0.8||0.7||0.7||0.9|
|Exchange Rate (average)||496.08||594.27||600.68||588.92||565.09|
Real GDP: Following economic recovery in Nigeria and increased progress in dealing with Boko Haram attacks, the macroeconomic growth picture for 2018 for Niger is looking upbeat as trade flows improve. In addition, fresh fiscal impetus towards improving irrigation fed agriculture (41% of GDP) under the 3N initiative provides upside to growth forecasts. Furthermore, we see scope for sustained optimism on economic growth as Niger pursues structural reforms as part of the IMF reform package associated with the new ECF programme in January 2017. In all we forecast real GDP growth of 5.2% in 2018 roughly unchanged from 2017.
Inflation: We expect announced hikes in the general tax level and plans to raise gasoline prices to the government petrol distributor, to reduce arrears, to fuel an increase in in headline inflation to 2.5% (2017e: 2.2%) which will remain below WAEMU’s convergence criterion of 3%. In addition, inflationary expectations are well anchored given the stability of the currency peg to the EUR.
Fiscal balance: As part of the ECF reforms agreed with the IMF, Niger is set to embark on fiscal consolidation with the 2018 budget set to rise by only 2.5% y/y to XOF1.9trn. The wage bill is projected to shrink to 33.2% of the budget (2017: 41%) as part of reforms to trim recurrent expenditure while security outlay remains at 15% of the budget. To fund the budget, President Mahamadou Issoufou has announced a rise in the tax burden to 16.2% from 13.6% in 2017 alongside other measures to boost fiscal revenues. The government also plans to implement a treasury single account among other tax collection reforms to minimize revenue losses and drive a softer budget deficit. (2018f: 5% vs. 2017e: 5.4%).
Current account: We forecast an expansion in exports over 2018 driven by higher prices of uranium (45% of exports) and oil (16% of exports) which alongside on-streaming of new oil fields is likely to push oil production to 18kbpd. Following the completion of import-intensive investment project in infrastructure and hydrocarbon industry, we see a gradual moderation in imports over the medium term. Consequently, we expect the current account deficit to narrow slightly, but to remain large, above 10% of GDP over 2018.
Given the large border with Nigeria, Niger is vulnerable to economic and security spill over risks. A deterioration in economic activity and a rise in security issues associated with Boko Haram in Nigeria would result in lower trade flows to Niger. Furthermore, the largely subsistence nature of Niger’s agriculture and threat of desertification leaves the sector vulnerable to adverse weather conditions which would hurt overall growth. Steep declines in oil and uranium prices pose downside risks to new investment to raise output in the extractive sector.
Exchange Rate Structure
|Target||XOF655.957 to EUR1|
|Type of intervention||Via central bank|
|FX Products||Spot||Forwards||Non-deliverable Forwards||Options||Swaps|
|Daily trading volume (USD mn)||n/a||n/a|
|Average trade size (USD mn)|
|FX Market Structure||BCEAO’s exchange regime is free of restrictions on payments and transfers for current international transactions, apart from restrictions maintaned for security.|
|Non-resident FX Regulations||Spot||Forwards||Non-deliverable Forwards||Options||Swaps|
|Trade and FDI flow||No restrictions||n/a|
|Resident FX Regulations||Spot||Forwards||Non-deliverable Forwards||Options||Swaps|
|Trade and FDI flow||No restrictions||n/a|
|Primary Market||Treasury bills||Treasury notes||Treasury bonds||Central Bank bills||OMOs|
|End use||Government financing||n/a||Government & infrastructure financing||n/a|
|Maturity structure||6-months to 1-yr||3- to 7-yrs|
|Daily trading volume||Limited trading||n/a|
|Average trade size||Limited trading|
|Ecobank local affiliate contact details:|
Ecobank Niger, Angle Boulevard de la Liberté et Rue des Bâtisseurs, Niamey
Tel: +225 20 73 10 01 / 83
|Government debt (% GDP)||31.9||41.3||45.9||51.5||53.2|
|External debt (official creditors, % GDP)||20.5||27.4||30.7||33.9||35.2|
|External public debt stock (USD bn)||1.7||2.0||2.3||2.6||2.9|
|Share of total sub-Sahara debt (%)||0.7||0.8||0.8||0.8||0.8|
Hydrocarbon & mineral production
Niger is Africa’s largest producer of uranium, with estimated output of 2,904 tonnes in 2016, most of which is exported to France as fuel for its nuclear power stations. Niger also produced an estimated 3 tonnes of gold in 2016, mostly through artisanal operations, as well as 511 tonnes of petroleum coke.
Niger became an oil producer in 2011 when production started at the Agadem block, operated by China National Petroleum Company (CNPC). Output has averaged 20,000 bpd from the block, which is estimated to hold 650 mn barrels. Following the award of a second oil licence to CNPC in November 2013 to ramp up oil production, Niger is considering the construction of an export pipeline which would link up with the Chad–Cameroon oil pipeline in order to export 60,000 bpd of crude oil through Cameroon. CNPC has constructed a 20,000 bpd refinery in the Zinder region, which produced an estimated 754,000 tonnes of petroleum products in 2014. As Niger only consumes around 440,000 tonnes per year, the balance is exported to its neighbours, Nigeria and Burkina Faso.
Soft commodity production
Given Niger’s arid and sparsely populated terrain, the country produces few cash crops for export. Most agricultural production is for domestic consumption, usually within the locality where it is produced. In 2016 the country produced an estimated 75,000 tonnes of milled rice, less than 5% of the outturn of its neighbour, Mali. Niger does export small volumes of cotton, live animals, tobacco and sugar, some of which are re-exports.
Niger’s imports totalled US$1.9bn in 2016, down 24% on the previous year. In recent years, Niger has imported large volumes of aircraft, totalling US$620mn in 2015 and US$381mn in 2016. Niger is heavily dependent on imports of capital and consumer goods to meet domestic demand, including USD324mn worth of vehicles & machinery, US$134mn of electronics and US$74mn of pharmaceuticals. The country also imports large volumes of food, both for domestic consumption and for re-export to its landlocked neighbours, including US$152mn of rice (mostly from Thailand) and US$79mn of palm oil. As the country has ample refining capacity, imports of petroleum products are small (US$74mn in 2016) and mostly destined for re-export. In 2016 the country also imported US$91mn of cement and US$67mn of iron & steel.
Niger’s exports totalled US$927mn in 2016, 17% higher than the previous year. The country’s most valuable export is uranium, worth US$299mn, 93% of which went to France and the balance to the USA. Niger exports its excess refined petroleum (worth US$151mn in 2016) to its neighbours, Nigeria, Mali and Burkina Faso. The country also exported US$35mn worth of gold in 2016, nearly all of which went to Switzerland. Niger is a major re-exporter of food to neighbouring countries, and in 2016 the country exported US$134mn of rice, US$132mn of palm oil and US$31mn of pasta. Niger’s only notable soft commodity export is cotton, worth just US$28mn in 2016, most of which went to the EU and Asia.