2024-02-21 10:49:37
Niger was once once more unable to pay a due date on the regional market of the West African Economic and Monetary Union (UEMOA). Since the coup in July 2023 and the implementation of severe sanctions, Niger has missed several payments. A total sum which amounts to more than 478 million euros. This situation largely limits the Nigerien authorities’ room for maneuver.
Published on: 02/21/2024 – 11:49 Modified on: 02/21/2024 – 11:47
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The Niger must now deal with fewer resources, limited revenues, and frozen accounts. The country therefore faces an imbalance between revenue and expenditure. For the moment, only one solution is available to the authorities, analyzes Benoît Chervalier, lecturer on the financing of African economies at Sciences Po Paris: “ The best way to reconcile this gap between the two is simply to delay repayment or compliance with the obligations that may arise from a debtor to his creditor. »
Since the start of the year, Niger has failed to meet eight deadlines on regional markets. “ It should be noted that this payment incident occurs in a context where the State of Niger is subject to sanctions taken once morest it by the Conference of Heads of State and Government of the West African Economic and Monetary Union », Indicates the region’s public securities markets body in a note, Monday February 19.
Reimbursement defaults which will have an impact in the medium and long term for Niger. Moody’s further downgraded Niger’s rating last week for the third time since the coup. Certain analyzes that RFI was able to consult point to the risk of solvency of the banking sector if the sanctions were not lifted quickly. However, the financial analyst from REDD Intelligence, a specialist in sovereign debt issues in Africa, wants to be reassuring regarding the regional impacts. “ There does not seem to be any concentration of debts in a single banking establishment, it seems relatively dispersed “, he says. Furthermore, if the amount due is significant on the scale of Niger, it remains very relative compared to the giants of the regional economy that are Ivory Coast or Nigeria, he explains once more.
Importance of the mining and agricultural sector
The sanctions are in fact constraining Niger’s economy. Directly via the freezing of certain accounts housed at the BCEAO, the suspension of aid from international donors – from 11% of GDP before the coup d’état it is today estimated at less than 4% of GDP – or even the impossibility for authorities to raise certain funds. Consequently, this gives a constrained 2024 budget.
Indirect conclusions regarding the economy are also felt. Particularly with the sharp slowdown in cross-border trade, underlines Benoit Chervalier. The private sector, already under great pressure, might see a certain number of companies close, further underlines the note consulted by RFI. The lack of bank liquidity and the reduction in expenses affect entrepreneurship, particularly the construction sector, continues this same analysis.
Another significant factor: the suspension of Nigeria’s electricity cooperation, which represented 70% of Niger’s supply, has in fact consequences on economic activities. Either this lack of power is compensated by thermal power plants which have a higher cost, or by outages which impact activities.
Necessary financial solutions
Faced with these financial pressures, Niger is therefore adapting. The authorities have, for example, put in place a new system of collecting taxes in cash, for example, to circumvent the sanctions which affect their accounts. By not paying part of its debts, the State postpones the difficulty of raising certain sums. “ It’s a mixture of all that. Between this piloting “a little bit on sight”and generating as much revenue as possiblespecifies Benoît Chervalier. Whether it is through existing companies, it can be through a form of tax harassment once morest companies. This also means an overhaul of the rights and obligations of a certain number of contracts. »
However, despite sanctions imposed following the coup d’état in July 2023, the Nigerien economy has been able to resist. “ Remarkable resilience », even underlines an economist from a large institution, contacted by RFI. The authorities played on “ the whole palette » possibilities, says Benoît Chervalier. The mining sector in particular continued its activities. The agricultural sector also supports declining growth – 7% pre-coup to 3.7% estimated post-coup – but still positive if the next campaign is good.
Among the most anticipated revenues, future oil revenues. However, this will not solve all the problems even if the sanctions are soon lifted according to financial analyst Mark Bohlund. “ Oil production should help, and the spillover effect of these cumulative arrears should be relatively limitedhe assumes. But they are going to need financial solutions. Perhaps as part of a syndicated loan. But I think to get such a loan they will need some kind of multilateral credit guarantee. »
Needs that will be “ difficult to achieve without some sort of transition to civilian rule “, still believes Mark Bohlund. If Niger manages to keep its head above water despite predictions, Benoît Chervalier wonders: “ How long can this policy last? It is certain that we do not see this policy lasting very long since it is not sustainable. ”, in the long term. For the teacher, as for the analyst, the solution will inevitably be political.
Read alsoExport of Nigerien diesel to three neighboring countries: “Commercial priorities take precedence over sanctions”
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