AFRICAN DEVELOPMENT FUND

Reference No : Language : English Distribution : Original : French Support Programme for Inclusive Growth and the Strengthening of Food Security (PACIRSA) Country : Niger APPRAISAL REPORT August 2012

Appraisal Team .

Team Leader: Team Members: Sector Director: Country Director: Division Manager:

Ms. K. ISSABRE-SOW, Senior Public Financial Management Specialist, OSGE1 M. J. BANDIAKY, Senior Macro-Economist, OSGE.1 Mr. R. DOFFONSOU, Senior Country Economist, ORWA Mr. L. GARBA, Senior Environmentalist, OSAN4 Ms. R. HANNE DIALLO, Senior Procurements Officer, ORFP.1 Mr. S.A. NNA EBONO, Financial Management Specialist, Regional Coordinator, ORPF2 Mr. B. TOP, Consultant, OSGE1 Mr. Isaac LOBE NDOUMBE, Director, OSGE Mr. Janvier K. LITSE, Director, ORWA Mr. Jean -Luc BERNASCONI, Division Manager, OSGE 1

Peer Reviewers .

Mr. Mouldi TARHOUNI, Chief Irrigation Engineer, OSAN.2 Mr. Achille Charles S. TOTO SAME, Principal Public Financial Management Specialist, OSGE 1 Ms. Sonia DAH, Young Professional, OSGE 1

Table of Contents PROGRAMME RESULTS-BASED LOGICAL FRAMEWORK .............................................................................................. i 

PROGRAMME IMPLEMENTATION SCHEDULE ............................................................................................................... vi 

I.  PROPOSAL ................................................................................................................................................................... 1 

II.  COUNTRY AND PROGRAMME CONTEXT ........................................................................................................... 2 

2.1  Recent Political, Economic and Social developments, Prospects, Constraints and Challenges ........................... 2 

2.2  Government’s Development Strategy and Medium-Term Priorities .................................................................... 4 

2.3.  The Bank’s Cooperation Status and Portfolio Situation ........................................................................................ 5 

III.  JUSTIFICATION, MAIN DESIGN ELEMENTS AND SUSTAINABILITY ...................................................... 5 

3.1.  Links to the RBCSP, Country Readiness Assessment and Analytical Underpinnings ......................................... 5 

3.2.  Collaboration and Coordination with Other Donors .............................................................................................. 6 

3.3.  Results and Lessons Learnt from Similar Operations ............................................................................................ 6

3.4 Relations with the Bank's Other Operations in the Country……………………………………………………7 3.5 Bank's Comparative advantages and Added Value………………………………………………………………7 3.6.  Application of Good Practice Principles on Conditionality .................................................................................... 7 

IV.  PROPOSED PROGRAMME AND EXPECTED RESULTS ................................................................................ 8 

4.1.  Programme Goal and Objective ............................................................................................................................... 8 

4.2.  Programme Components and Expected Results .................................................................................................... 8

4.3 Financing Requirements and Arrangements…………………………………………………………………… 14 4.4.  Programme Beneficiaries ........................................................................................................................................ 14 

4.5.  Macroeconomic Impact and Impact on Governance ............................................................................................. 14 

4.6.  Impact on the Business Environment ..................................................................................................................... 14 

4.7.  Impact on Poverty and Gender ............................................................................................................................... 14 

4.8.  Environmental Impact ............................................................................................................................................... 16 

4.9.  Climate Change ........................................................................................................................................................ 16 

V.      IMPLEMENTATION, MONITORING AND EVALUATION ........................................................................... 16 

5.1.  Implementation Arrangements ............................................................................................................................... 16 

5.2.  Monitoring and Evaluation Arrangements ............................................................................................................ 17 

VI.  LEGAL DOCUMENTS AND LEGAL AUTHORITY ......................................................................................... 17 

6.1         Instruments ........................................................................................................................ 17 6.2         Conditions Associated with Fund Intervention ............................................................................ 17 6.3         Compliance with Bank Group Policies ....................................................................................... 18 VII.  RISK MANAGEMENT........................................................................................................................................... 18 

VIII.       RECOMMENDATION ........................................................................................................................................... 19 

__________________________________________________________________________ This report was drafted by Ms. K. ISSABRE-SOW, Senior Public Financial Management Specialist, OSGE, following an appraisal mission to Niger from 2 to 13 July 2012 preceded by a preparation mission conducted from 2 to 13 May 2012. It benefitted from the contributions of the Country Economist; colleagues from OSGE, OSAN and ORPF and the recruited consultant as well as discussions with the IMF, World Bank, European Union and the French Development Agency. Questions on this report should be referred to Mr. I. Ndoumbé Lobé, Director, OSGE (Extension 2077) and Mr. J.L. Bernasconi, Division Manager, OSGE 1 (Extension 2177).

List of Tables

List of Annexes

Fiscal Year January-December

Currency Equivalents Sept. 2012

UA 1 = SDR 1 UA 1 = USD 1.52201 UA 1 = EUR 1.20689 UA 1 = CFA.F 791.66794

Table 1 Primary Sector Share in Current GDP at Factor Costs (in %) Table 2 Lessons Learnt from Similar Past Operations and Reflected in PACIRSA

Design Table 3 Budget Balance and Financial Requirements 2011-2013 Table 4 Risks and Mitigation Measures

Annex 1 Annex 2

General and Technical Prerequisites Letter of Development Policy

Annex 3 Programme Measures Matrix Annex 4 Statement on Relations between the IMF and the Republic of Niger Annex 5 Key Macroeconomic Indicators Annex 6 Comparative Socio-economic Indicators

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Acronyms and Abbreviations

ADB African Development BankADF African Development FundADPRS Accelerated Development and Poverty Reduction Strategy AFD ARMP

French Development Agency Public Procurement Regulatory Authority

COFO DGCMP

Land Tenure Commissions General Directorate for Public Procurement Control

DGEPE General Directorate for the Economy, Forward Planning and Evaluation

DGTCP Directorate General for the Treasury and Public Accounting EITI Extractive Industries Transparency Initiative EU European UnionGDP Gross Domestic ProductHDI Human Development IndexI3N “Nigeriens Feed Nigeriens” InitiativeIMF International Monetary FundINS National Institute of StatisticsMDG Millennium Development GoalsMTEF Medium-Term Eexpenditure FframeworkNAMAs Nationally Appropriate Mitigation ActionsNAPA National Adaptation Programme of ActionPAEPAR Rural Water Supply and Sanitation Project in the Regions of Dosso and

Tillaberi PASDRP Accelerated Development and Poverty Reduction Strategy Support

Programme PDES Economic and Social Development PlanPEFA Public Expenditure and Financial AccountabilityPEMFAR Public Expenditure Management and Fiduciary Accountability ReviewPICAG Interim Framework Programme of Government Action PMERSA-MTZ Water Mobilisation Project to Enhance Food Security in Maradi,

Tahoua and Zinder Regions (PMERSA-MTZ)PRGFP Public Finance Management Reform ProgrammePRMP Public Procurement Reform ProjectRBCSP Results-Based Country Strategy PaperRSO PACIRSA

Reform Support Operation Support Programme for Inclusive Growth and the Strengthening of Food Security

SAP Structural Adjustment ProgrammeSDDCI Sustainable Development and Inclusive Growth Strategy SDR USA

Special Drawing Rights United States of America

TFP Technical and Financial PartnersTOFE Table of Government Financial Operations

UA MUA

Unit of Account Million Units of Account

UNDP United Nations Development ProgrammeWAEMU West African Economic and Monetary UnionWB World Bank

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LOAN INFORMATION Client Information BORROWER : REPUBLIC OF NIGER EXECUTING AGENCY : General Directorate for the Economy, Forward Planning and Evaluation (DGEPE) at the Ministry of Planning, Land Management and Community Development Programme Financing Source Amount (in UA million) 2012 2013 ADF 11.56 10.00

WORLD BANK 41.05 31.57 EUROPEAN UNION 66.28 33.55

TOTAL 118.89 75.12 ADF Financing Information

Loan currency

UA 21.56 million

Commitment fee 0.5% Other (service) charges 0.75% Tenor 50 years, with a grace period of 10 years

Activities Date 1. Preparation mission May 2012 2. Concept Note Approval 4 July 2010

3. Appraisal mission July 2012

4. Loan Agreement Negotiation September 2012

5. Board Presentation October 2012

6. Effectiveness November 2012

7. Disbursement of the 1st tranche November 2012

8. Mid-term Review February 2013

9. Disbursement of the 2nd tranche March 2013

10. Supervision March 2013

11. Completion report June 2014

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PROGRAMME EXECUTIVE SUMMARY

Overview of Programme

Programme Name: Support Programme for Inclusive Growth and the Strengthening of Food Security Geographical Scope: National Implmentation |Period: 2012-2013 Programme Cost: UA 21.56 million as ADF loan Programme Type: General Budget Support The Government’s financiing requirements for 2012 are CFA.F 398.7 billion, or approximately 11.6% of GDP. The ADF’s contribution (first tranche) towards covering these financing requirements in 2012 is UA 11.56 million, or approximately CFA.F 9.151 billion. Macroeconomic projections for 2013 show financing requirements of CFA.F 474.1 billion, which will be partly covered by the second ADF tranche of approximately CFA.F 7.916 billion.

Expected outcomes of the programme and its beneficiaries

The overall expected outcomes at the end of programme implementation are: (i) improved internal revenue collection; (ii) greater transparency and efficiency in the expenditure chain; (iii) internalization of WAEMU Public Financial Management Directives; (iv) strengthening of agro-pastoral sector governance; and (v) greater competitiveness for agro-pastoral sub-sectors. The programme’s ultimate beneficiary is Niger’s population, especially rural dwellers including women and youths. The intermediate beneficiaries are private economic operators who will enjoy an improved business environment that is conducive to national and international trade as well as public financial management transparency achieved through public procurement reform.

Needs assessment and relevance

PACIRSA supports Government efforts to enhance public financial management efficiency and boost the country’s resilience to recurrent food crises. It contributes to the implementation of the 2011-2014 public finance management reform programme (PRGFP), the I3N and the new 2012-2015 Economic and Social Development Plan (PDES). It builds on the positive outcomes of the previous PASDRP budget support financed by the Bank in 2010.

Bank’s Added Value

In recent years, the Bank has developed great expertise in strengthening financial governance and rural development through its operations in several countries. It supports the WAEMU Commission in its vast public finance reform programme by funding the Regional Public Procurement Reform Project (PRMP-WAEMU). This budget support operation will also enable the Bank to participate actively and make effective contributions to the reform implementation dialogue in Niger. The Bank’s expertise will be used to help the Government craft its strategies.

Institutional Development and Knowledge Building

PACIRSA will contribute to the institutional development of public administration. The analytical studies as well as the various draft documents reviewed to formulate the programme all contributed to knowledge building which helped to improve the programme design. The lessons learnt from programme implementation will help to improve the Bank’s approach to sustainable reform.

PROGRAMME RESULTS-BASED LOGICAL FRAMEWORK

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Country and Project Name: NIGER/ Support Programme for Inclusive Growth and the Strengthening of Food Security (PACIRSA) Project Goal: Contribute to the creation of conditions which will foster strong and stable growth and bolster the country’s resilience to food crises, in order to reduce poverty.

RESULTS CHAIN  PERFORMANCE INDICATORS MEANS OF VERIFICATION 

RISKS/ MITIGATIVE MEASURES 

Indicator (including CSIs) 

Baseline Situation Target

IMPA

CT

Improvement of quality of life for Niger’s citizens

Economic growth rate 2.1% in 2011 8.6% in 2015 National statistics

Risks / Mitigation Measures Risk 1: Security risk at the regional level resulting from armed conflicts in neighbouring countries. Mitigative Measures 1: The Government is bent on reconciling development priorities with security concerns by forging on with reforms while beefing up security. Risk 2: Macroeconomic instability resulting from the country’s extreme economic vulnerability to external shocks. Mitigation Measures 2: The Government is determined to carry on with economic diversification and the implementation of economic reforms through implementation of a new programme with the IMF over the 2012-2015 period. Risk 3: Fiduciary risks resulting from weaknesses in the public finance management system. Mitigation Measures 3: Major efforts were made by the authorities over the last few years to improve public finance management and mitigate fiduciary risks. Achievements will be consolidated through implementation of the new reform programme (PRGFP). Risk 4: Limited human capacity to conduct reforms Mitigation Measures 4: Partners provide institutional support and technical assistance to address the problem of limited capacity. The Bank has just adopted a new project, PAMOGEF, to build public finance management capacity. Furthermore, the Government’s I3N initiative has an important component on rural capacity-building. Risk 5: Risk related to good coordination in the distribution of agricultural inputs. Mitigation Measures 5: The Government is preparing an action plan for the supply of agricultural inputs under the programme Risk 6: Weakness of the national development policy coordination mechanism Mitigation Measures 6: During PRGFP implementation, the authorities revised the existing institutional mechanism for coordination and monitoring of reforms to enhance its operationality by 2012. It will serve as the framework for dialogue with development partners, especially those involved in budget support. The relevant draft instruments, amended by TFPs, are in the process of being adopted by the Government.

Incidence of monetary poverty

59.5% in 2008 55.0% in 2015 INS Household Survey Report

Creation of new jobs in the rural sector

N/A 7000 direct new jobs (including 1/3 for women)

I3N Annual Implementation Report

EFEC

TS

Effect 1: Financial governance strengthened

1.1 Tax ratio (revenue as a percentage of GDP)

14.9% in 2011 17.0% in 2013 National statistics

1.2 Competition, value for money and controls in procurement

PEFA indicator PI-19: B (2008)

PEFA indicator PI-19: A (2013)

PEFA report

Effect 2: Resilience of the population to food crises is boosted 

2.1 Food and nutrition vulnerability index

15.0% in 2011 13.0% in 2013 I3N Annual Implementation Report 

2.2 Irrigated surface area (as a percentage of irrigable land)

14.0% in 2011 17.0% in 2013 I3N Annual Implementation Report

OUTC

OMES

Component A: Optimisation of Budget Policy and Management 1.1 Improvement of domesticl revenue collection 

1.1.1 Percentage of total revenue collected relative to budget estimates

1.1.1 72% en 2011 1.1.1 80% in 2013 PRGFP Annual Implementation Report 

1.1.2 Legal status of senior accountant for tax and customs revenue officers

1.1.2 Legal status of senior accountant for tax and customs revenue officers is not adopted in 2011 

1.1.2 The revenue accounts of the tax and customs revenue officers are produced and factored into the general balance of the Chief Revenue Officer of the Treasury as of 30 September 2013 for preparation of the complete management account. 

PRGFP Annual Implementation Report 

Improvement of transparency and efficiency in the execution of the public expenditure chain 

Number of regions covered by the General Directorate of Financial Control

1.2.1 1 region in 2011 1.2.1 8 regions in 2013 Annual Activity Report of the General Directorate for Financial Control  

1.2.2 Enabling instruments of the public procurement code

1.2.2 The enabling instruments of the public procurement code are not adopted in 2011 

1.2.2 The enabling instruments of the public procurement code are adopted before the end of the first quarter of 2013

PRGFP Annual Implementation Report

Component B: Strengthening of the Country’s Resilience to Food CrisesReinforcement of agro-pastoral sector governance 

2.1.1 Small-scale Irrigation Strategy (SPI) and action plan

2.1.1 No SPI in 2011 2.1.1 SIR and its action plan are adopted before the end of 2013

I3N Annual Implementation Report

2.1.2 Livestock Sustainable Development Strategy (SDDE)

2.1.1 No SDDE in 2011 2.1.2 SDDE is adopted before the end of 2012

I3N Annual Implementation Report

2.1.3 Strategic Framework for Sustainable Land Management (CGDT)

2.1.3 No CGDT 2.1.3 CGDT is adopted before 31 December 2012

I3N Annual Implementation Report

2.1.4 Operationalization of the I3N institutional steering mechanism

2.1.4 The mechanism is not operational

2.1.4 The mechanism is operational in 2013

I3N Annual Implementation Report

Adoption of the I3N Environmental and Social Management Tools

2.1.5 The tools are not prepared in 2011

2.1.5 The I3N Environmental Assessment and Social Safeguards (EESS) report is validated in 2013

I3N Annual Implementation Report

2.1.6 Operationalization of SPI, SDDE and CGT within the framework of emergency programmes

2.1.6 N/A 2.1.6 Development of 2500 ha in 2012 and 2013; food supplements of 6,000,000 TLU in 2013; fixation of 3500 ha of sand dunes and 2778 firebreaks in 2013

Activity reports of emergency programmes for 2012 and 2013

2.1.7 Decentralisation of the land tenure security and management mechanism

2.1.7 Insufficient national coverage

2.1.7 Extension of the mechanism to communes (2012) and Departments (2013)

Annual reports of the Ministry in charge of Land Issues

2.2 Improvement of the business environment and the competitiveness of the agro-pastoral sub-sectors 

2.2.1 Number of documents required for export preparation

2.2.1 : 8 in 2011

2.2.1 : 6 in 2013 Doing Business Report

2.2.1 Number of documents required for import preparation

2.2.2 : 10 in 2011 2.2.2 : 8 in 2013 Doing Business Report

KEY ACTIVITIES RESOURCES Signing and entry into force of the loan, opening of the special account to the

BCEAO, implementation of reforms (Optimisation of Budget Policy and ADF : 21,56 UA million ; Others donors : 172,45 UA millions Total : 194,45 millions of UA-

PROGRAMME RESULTS-BASED LOGICAL FRAMEWORK

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Management, Strengthening of the Country’s Resilience to Food Crises);implementation reports and completion report

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PROGRAMME IMPLEMENTATION SCHEDULE

Activity 2012 2013 2014 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

1. Loan Process 1.1 Appraisal 1.2 Loan Negotiations 1.3 Loan Approval 1.4 Loan Signature 1.5 Loan Effectiveness 1.6 Authorisation of 1st disbursement 1.7 Authorisation of 2nd disbursement

2. Programme Implementation 2.1 Implementation of 1st tranche measures Reforms Effects of Reforms 2.2 Implementation of 2nd tranche measures Refor

ms Effects of Reforms

3. Programme Supervision and Monitoring 3.1 Bank supervision 3.2 Audits 4. Programme Completion

4.1 Drafting of the programme completion report by the Government of Niger

4.2 Drafting of the programme completion report by the Bank

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REPORT AND RECOMMENDATION OF MANAGEMENT TO THE BOARD OF DIRECTORS OF THE AFRICAN DEVELOPMENT FUND

CONCERNING A LOAN PROPOSAL FOR THE REPUBLIC OF NIGER TO FINANCE THE SUPPORT PROGRAMME FOR INCLUSIVE GROWTH

AND THE STRENGTHENING OF FOOD SECURITY (PACIRSA) I. PROPOSAL 1.1 Management submits the following proposal and recommendations for the granting of a loan of UA 21.56 million to the Republic of Niger to finance the Support Programme for Inclusive Growth and the strengthening of food security (PACIRSA) for two fiscal years (2012 and 2013). This operation is a response to a request from the Government of Niger submitted on 14 October 2011. Programme appraisal was conducted in July 2012 through consultations with Niger authorities, private sector stakeholders and members of civil society. In addition to public finance reforms to improve internal revenue collection and enhance transparency and efficiency within the public expenditure chain, PACIRSA focuses on strengthening agro-pastoral sector governance and raising the competitiveness of agro-pastoral sub-sectors in order to boost the country's resilience to food crises. 1.2 PACIRSA is in line with the priorities of the Country Strategy Paper (RBCSP 2005-2009), extended to December 2012. Component A of the Budget Policy and Management Optimisation Programme is consistent with the RBCSP strategic thrust that focuses on governance by essentially "supporting the improvement of public finance management and the consolidation of macroeconomic stability". Component B of the Programme, which focuses mainly on the development of small-scale irrigation and the establishment of a quality monitoring and information system for water resources contributes to the achievement of the first RBCSP pillar which is "supporting rural sector development by harnessing Niger’s water resources". It is also in keeping with the Bank’s 2008-2009 Strategic Directions and Governance Action Plan (GAP) that seeks to enhance financial and sectoral governance. As indicated in the Government’s Letter of Development Policy (Annex 2), PACIRSA is also consistent with the objectives of the 2012-2015 Economic and Social Development Plan (PDES) which is the new reference and coordination framework for all development operations in Niger. Indeed, PDES, which continues to target the strategic objectives of SDRP, has five strategic pillars, namely: (i) creation of sustainability conditions for balanced and inclusive growth; (ii) consolidation of the credibility and efficiency of public institutions; (iii) food security and sustainable agricultural development; (iv) a competitive and diversified economy for accelerated and inclusive growth; and (v) promotion of social development. Lastly, PACIRSA supports Niger’s 2011-2014 Public Finance Management Reform Programme (PRGFP) as well as the Government’s I3N (“Nigeriens feed Nigeriens) strategy over the 2012-2015 period.  1.3. PACIRSA’s development objective is to contribute to creating conditions that will foster strong and stable growth and bolster the country’s resilience to food crises, in order to reduce poverty. Its main operational objectives are to: (i) improve internal revenue collection and enhance public expenditure management efficiency with a view to increasing investments in priority sectors, especially the rural sector (Component A); and (ii) build the country’s resilience to food crises by improving agro-pastoral sector governance and developing a business environment that fuels the development of agro-pastoral sub-sectors (Component B). 1.4 The main expected outcomes at the end of programme implementation are: (i) an improvement in public finance management through better internal revenue collection, increased transparency and efficiency in the expenditure chain, and appropriation of WAEMU Directives on a Harmonised Public Financial Management Framework; (ii) strengthening food security by enhancing agro-pastoral sector governance and boosting the competitiveness of agro-pastoral sub-sectors.

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1.5. Programme design benefitted from broad-based consultations involving several stakeholders, especially services in charge of public finance, the private sector and agro-pastoral sector development, as well as professional business bodies (Chamber of Commerce), civil society and the main technical and financial partners (WB, IMF, EU, UNDP, AFD, etc.). These consultations underscored the importance of improving public finance management and strengthening agro-pastoral sector governance. II. COUNTRY AND PROGRAMME CONTEXT 2.1 Recent Political, Economic and Social Developments, Prospects, Constraints and Challenges Political, Economic and Social Context 2.1.1 Political Context: The political context is characterized by a return to normal constitutional order. After the military coup of February 2010, a transitional government was formed in September 2010 and the country’s relations with various development partners were gradually normalized by the end of 2010. Municipal, legislative and presidential elections were held in 2011 and deemed to be free and fair by the international community. These elections that placed new authorities at the helm of State enabled the country to restore its democratic institutions, which is a prerequisite to good governance and consolidation of the rule of law. The priorities of the new Government that assumed power in April 2011 include a firm resolve to: speed up economic development and improve governance; restore the State’s fiscal monopoly and curb the embezzlement of public funds; guarantee equal access to public contracts and ensure the efficiency and quality of public expenditure; and create conditions conducive to investments in Niger.i 2.1.2. Economic Context: Dominated by a primary sector that generated almost 47% of its gross domestic product (GDP) in 2011, Niger’s economy is extremely vulnerable to the vagaries of climate and to external shocks. 2.1.3. The country has to deal with the recurrent effects of climate change, especially droughts, since 80% of its population depends on rain-fed farming and stockbreeding for most of the income needed to satisfy their basic needs. Agriculture remains a key variable (29.8% of GDP on average over the 2007-2011 period) that determines the country’s performance and stability as well as the microeconomic wellbeing of its population. This vulnerability has, in recent years, been aggravated by a deterioration of the national socio-political situation due to the crises in Côte d’Ivoire, Nigeria, Libya and the recent security threats in Mali that disrupted the order of development priorities and increases pressure on the budget and its sector allocations. GDP growth also dropped sharply by almost 6 points from 8,2% in 2010 to 2.3% in 2011ii while inflation rose from 0.9% in 2010 to 2.9% in 2011, due to the direct impact of the crop year deficit on foodstuff prices.iii

i General Policy Statement of the Prime Minister, June 2011 ii Source: ADB, september 2012, Niger -macroeconomics indicators iii Source: ADB, September 2012, Niger -macroeconomics indicators

Table 1: Primary Sector Share in Current GDP at Factor Costs (in %) Average

Sector 2007 2008 2009 2010 2011 2007-2011 Primary, including - Agriculture - Stockbreeding - Forestry and fisheries 

46.9 28.71

3.5 4.7

49.8 32.4 12.9 4.5

45.6 27.0 13.6 5.0

48.9 32.0 11.9 5.0

46.8 29.2 12.5 5.1

47.6 29.8 12.9 4.9

Secondary 11.6 10.9 12.4 12.4 12.8 12.0

Tertiary 41.5 39.3 42.0 38.7 40.4 40.4 Source: National Ecomonic Accounts, INS Niger, March 2012

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2.1.4. With respect to public finance, despite a significant increase in the tax ratio from 13.5% of GDP in 2010 to 14.9%iv in 2011, it still falls short of the Community target of 17%, prescribed under the convergence criteria of the West African Economic and Monetary Union (WAEMU). There is also a slight improvement in the budget balance, from -2,4% of GDP in 2010 to -2,0% in 2011. This was due notably to the increased mobilization of tax revenues. 2.1.5 The balance of payments current account deficit widened from -21.1% of GDP in 2010 to -28.3% in 2011, due to a deterioration of the current (especially private) transfers balance following the return of workers from Libya and the widening of the services deficit resulting from an increase in expenditure on services by extractive industries. However, the trend of the capital account and financial operations balance was positive andshowed a surplus of 27% of GDP in 2011 as a result of an increase in foreign direct investments especially in the mining and oil sectors. Foreign direct investment accounted for almost 16.8% of GDP in 2011. 2.1.6. Niger’s indebtedness risk increased in 2011 because of Government participation in the financing of natural resource exploitation projects. The external debt stock (including guarantees) rose from 16.2% of GDP at the end of 2010 to almost 18% of GDP at the end of 2011. However, the debt service remains sustainable and, in 2011, only represented 3,2% of goods and services exports in 2011. 2.1.7. Social Context: The social indicators show mixed results. The gross enrolment ratio (GER) rose from 57.8% to 66.3% between 2008 and 2010 in total and from 50.6% to 59.7% for girls. However, the under-five mortality rate remained high at 158 in 2011, compared to the African average of 127.2 deaths per 1000 live births.v Furthermore, low rainfall led to a decline in agricultural output in 2011 with a cereal gap (millet, sorghum, maize, fonio, rice, wheat) of approximately 692,000 tonnes. This situation has led to a food and nutrition crisis that affects close to 2.6 million people, or 17% of the country’s total population.vi Niger’s human development index (HDI) still remains low with a score of 0.295 in 2011 that ranks it 186th out of 187 countries. Hence, the probability that Niger will achieve the millennium development goals seems low. In 2013, two years from the MDG deadline, the poverty index is projected to be 55%, compared to the 31.5% targeted in 2015. 2.1.8. Governance Performance: Economic and financial governance indicators remain unsatisfactory although they are beginning to improve. According to the Mo Ibrahim Foundation's Index of African Governance, Niger was ranked 39th out of 53 countries in 2011, with a score of 44 out of 100, which is well below the continental average of 50. Besides, in 2011, Transparency International ranked Niger 134th out of 178 with a Corruption Perceptions Index (CPI) of 2.5 on a scale of 0 (high corruption) to 10. The Government has shown a clear determination to combat this phenomenon. Accordingly, in June 2011, it set up the High Authority to Combat Corruption and Associated Crimes that serves as a preventive, dissuasive and repressive mechanism to promote good governance and combat corruption. Prospects, Constraints and Challenges 2.1.9. Medium-term prospects: Despite the difficult economic situation, Niger’s economic prospects appear to be bright, especially as the Zinder refinery entered its production phase at the end of 2011. Furthermore, ongoing investments and a project to develop a new uranium mine financed by the French Group AREVA will double uranium production between 2012 and 2016, making Niger the world’s second largest producer. Consequently, total revenue should increase by a substantial 3.5% of

iv Source: FMI, May 2012, Country Report No. 12/109 v Source: Comparative Socio-economic Indicators, ADB, October 2011 vi Mid-Term Review of SDRP 2008-2012, Final Report, March 2012

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GDP. As indicated in the 2012 budget adopted by the National Assembly, revenue generated from natural resource exploitation will primarily be channeled towards efficient public investments, especially in infrastructure (transport and energy) and agriculture, which will foster economic growth, expected to reach 5% of GDP from 2013. 2.1.10. Challenges and Constraints: Despite these favourable prospects , Niger faces a certain number of economic and social challenges that deserve special attention. 2.1.11. The first challenge is to consolidate public finance sector governance and reinforce macroeconomic stability. Indeed, the last PEMFAR revealed persistent public finance shortcomings related to: (i) internal revenue mobilization; (ii) efficiency of public resource management and the public investment mechanism; and (iii) increased budget execution transparency. To address these challenges, Niger has to continue the transposition of the WAEMU Directives on Public Financial Management and speed up implementation of its public finance management reform programme (PRGFP 2011-2014). Besides, given the promising outlook in the extractive sectors (oil, uranium and other minerals) the country has to ensure that the proceeds from these resources are used properly in order to finance the required foundational and productive investments, in order to boost and diversify growth and enhance its inclusiveness. To that end, it must have a mechanism to align budget programming with sector goals. 2.1.12. The second challenge is to boost the economy’s resilience to the effects of recurrent climatic shocks. Niger’s economy remains dominated by a primary sector that is struggling to modernize itself and that remains subject to the vagaries of climate and external shocks. The country’s extreme dependence on rain-fed farming predisposes it to high food insecurity. Furthermore, years of low agricultural output are generally characterized by recurrent food crises that vary in scope and severity depending on the magnitude of the shortage and prevailing situational factors. Curbing the economy’s vulnerability to external shocks and striving for robust, sustainable, job-creating and poverty-reducing growth requires development of the rural sector and a sustainable improvement of its performance. Accordingly, Niger has to: (i) develop short and medium-term programmes on resilience to difficult climatic conditions in order to strengthen food security and guarantee substantial incomes for rural communities; (ii) create, in the medium and long terms, conditions that favour an improvement in production, the productivity of agro-pastoral sub-sectors and produce marketing. Without these appropriate climate change adaptation measures, the rural communities that depend on rain-fed farming will continue to be increasingly vulnerable. Besides, it is imperative for Niger to reinforce the inclusive character of public policies and diversify growth in order to generate youth employment within a population that has one of the highest growth rates (3.3%) in Sub-Saharan Africa.

2.2 Government’s Development Strategy and Medium-Term Priorities 2.2.1. To address Niger’s short, medium and long-term challenges, the authorities have reintroduced strategic planning into the development process. Accordingly, on 1 August 2012, the Government adopted the Economic and Social Development Plan (PDES) which is the sole reference framework over the 2012-2015 period for operations under the Government’s development programme known as the “Renaissance Programme”. It outlines a vision of the economic and social progress that is possible in the country and the structural transformations expected in Niger in the medium-term through the implementation of major foundational public investment programmes. It has 5 (five) strategic thrusts that relate to: (i) creation of sustainability conditions for balanced and inclusive growth; (ii) consolidation of the credibility and efficiency of public institutions; (iii) food security and sustainable agricultural development; (iv) economic competitiveness and diversification to ensure accelerated and inclusive growth; and (v) promotion of social development.

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2.2.2. At the operational level, the Government has formulated a public finance management reform programme (PRGFP 2011-2014) to improve tax and non-tax revenue collection and predictability, enhance expenditure chain management and promote economic and financial good governance. The PRGFP intervention thrusts are presented in Technical Annex 5. It also adopted a new strategy known as the I3N (“Nigeriens feed Nigeriens”) initiative aimed at ensuring sustainable food security by diversifying agro-pastoral production, ensuring regular supply to rural and urban agricultural and agro-food markets and boosting the country’s resilience to the effects of climate change (c.f. Technical Annex 6). I3N is underpinned by five strategic thrusts, viz: (i) "increasing and diversifying agro-silvo-pastoral and fishery production"; (ii) "regular supply of agricultural and agri-food products to rural and urban markets"; (iii) "boosting of community resilience to climate change, crises and disasters"; (iv) "improvement of the nutritional status of Niger’s population"; and (v) "improvement of I3N coordination".

2.3. The Bank’s Cooperation Status and Portfolio Situation The Bank’s active portfolio in Niger as at end-August 2012 comprised 8 projects, corresponding to 13 operations (grants and loans) totalling about UA 175 million. The focus areas are agriculture and rural development (28.16%), water and sanitation (28.09%), governance (19.63%), social sectors (12.95%) and infrastructure (11.17%). In general, the portfolio is recent (average age of 3 years) and is satisfactorily executed with an overall score of 2.33 compared to 2.3 in 2010 and a total disbursement rate of 25%. It has no problem project. However, the number of projects at risk has risen sharply from 11% in 2010 to 25% in 2012, although this rate is still below the Bank average which is estimated at 30%. III. JUSTIFICATION, MAIN DESIGN ELEMENTS AND SUSTAINABILITY 3.1. Links to the RBCSP, Country Readiness Assessment and Analytical Underpinnings 3.1.1. Links to the RBCSP: PACIRSA is aligned on the priorities of the 2005-2009 Results-Based Country Strategy Paper (RBCSP) extended to December 2012. Component A on "Optimisation of Budget Policy and Management" is in line with the cross-cutting RBCSP pillar on "supporting the improvement of public finance management and the consolidation of macroeconomic stability". Component B on "Boosting Niger’s resilience to food crises" by focusing on the development of small-scale irrigation and water resources management is in line with the first RBCSP pillar which is "supporting rural sector development by harnessing Niger’s water resources". Lastly, the programme is consistent with the Bank's Long-Term Strategy (LTS) which is in the process of validation and fully in keeping with the Bank’s 2008-2012 Governance Action Plan one of the main thrusts of which is the improvement of economic, financial and sector governance. 3.1.2. Country Readiness Assessment and Compliance with the Bank’s Bank’s Safeguards Policy: In general, Niger fulfils the requirements. The country enjoys political and economic stability and the Government has clearly demonstrated its resolve to implement reforms. From the economic standpoint, Niger’s performance and its commitment to maintaining macroeconomic stability are deemed satisfactory. At the technical level, Niger generally fulfils the requirements for use of the budget support mechanism (cf. Annex 1). The reforms designed under PACIRSA will further strengthen the fiduciary and macroeconomic frameworks. 3.1.3. Main Analytical Studies Conducted: Analytical studies conducted by the Bank, other technical and financial partners (TFPs) and the Government served as the basis for the preparation of this programme, including: (i) the second Public Expenditure Management and Financial Accountability Review (PEMFAR II) conducted in 2009; (ii) the mid-term review of the 2008-2012 SDRP conducted in March 2012; (iii) the IMF ex-post assessment, conducted in November 2011; (iv) the Government of Niger’s memorandum of economic and financial policies for 2012-2015; (v) the 2011-2014 public finance management reform programme (PRGFP); (vi) the I3N national strategy for 2012-2015; and (vii) the national adaptation programme of action (NAPA) on climate change

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(NAPA), 2006. These analytical studies reveal a certain number of challenges for Niger to address, relating to: (i) improving public finance management, mainly through harmonization of the legal and legislative frameworks with WAEMU community standards; (ii) improving internal and external revenue collection; (iii) improving budget management; (iv) creating fiscal space with a view to increasing development spending and investments while ensuring debt sustainability; and (v) boosting Niger’s resilience to food crises and natural disasters. 3.2. Collaboration and Coordination with Other Donors PACIRSA was designed in consultation with the main technical and financial partners (TFPs) operating in the field of public finance and rural sector development (IMF, WB, EU, UNDP, WAEMU and the Luxemburg, Spanish and Danish Cooperations). The other TFPs using the budget support instrument to support Niger are the IMF (with a 2012-2014 three-year programme supported by an extended credit facility (ECF) of SDR 78.96 million, or approximately USD 120.97 million); the WB (with a three-year economic, financial and sectoral reform support programme that receives USD 50 million as budget support); and the EU (with a three-year economic, financial and sector reform support programme that receives EUR 90 million as budget support). All these partners, including the Bank, have embarked on a drive to boost coordination and complementarity between their activities in the area of dialogue and monitoring of reforms. A common matrix is being prepared and PACIRSA reforms will be monitored within this framework.

3.3. Results and Lessons Learnt from Similar Operations 3.3.1. The completion reports of the Vth Structural Adjustment Programme (SAP V) and of the previous budget support (Accelerated Development and Poverty Reduction Strategy Support Programme (PASDRP)), both approved by the Bank, indicate inter alia that: (i) reforms have to be identified and programmed taking into account the implementation capacity of the structures involved; (ii) reform programmes ought to be accompanied by institutional support; and (iii) good coordination and an operational monitoring/evaluation mechanism are indispensable to the success of these programmes. The table below presents the lessons learnt from these operations and the extent to which they were factored into the design of this programme.

Table 2: Lessons Learnt from Similar Past Operations and Reflected in PACIRSA Design

Main Lessons Reflected in PACIRSA SAP V Completion Report (ADF/BD/IF/2011/26) and of PASDRP (Ref. ORQR-120705-4)

Reforms have to be identified and programmed taking into account the implementation capacity of the structures involved.

The reforms proposed in the programme are aligned on the PRGFP 2011-2014.

To ensure that they are implemented under the best conditions, reform programmes must be accompanied by substantial institutional support to the structures implementing the reforms.

Reform implementation will be supported by the institutional support project (PAMOGEF) with UA 10 million over the 2012-2015 period.

Good coordination and an efficient monitoring/evaluation mechanism are indispensable to the effective implementation of budget support programmes.

Having learnt from PASDRP implementation, the authorities gave the assurance that measures will be taken to put in place an operational institutional framework for coordination and monitoring.

3.3.2. Progress Made under the Bank’s Previous Budget Support: Niger has made significant progress in reforms, especially in public finance management. Implementation of the previous two reform support operations financed by the Bank led, inter alia, to the adoption of a new public procurements code that is in conformity with WAEMU provisions, and the establishment of the new structures of the General Directorate for the Treasury and Public Accounting (DGCTP), thus separating the payments, revenue and management functions in accordance with WAEMU directives. Besides, the national control mechanism was reinforced through the establishment and operationalization of the Court of Auditors. These reforms are also a continuation of other financial operations financed by the Bank in the Governance sector and whose activities are summarized in

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Technical Annex3. All these reforms have enabled Niger to maintain the quality of its relations with the IMF and other TFPs. However, despite this progress, more effort has to be made especially to improve internal revenue collection and ensure transparency in budget execution. 3.4. Relations with the Bank’s Other Operations in the Country PACIRSA implementation will consolidate the above-mentioned reforms conducted under the previous PASDRP budget support. Besides, PACIRSA will help to optimize the impact of the PAMOGEF project approved by the Bank in January 2012 and aimed at building the Government’s internal revenue collection capacity. Niger received PPCR funds to finance its Strategic Programme for Climate Resilience (PSRC) which comprises four projects including two supervised by the Bank, namely: the PDIPC on the development and capitalization of climate information to ensure better management of agro-pastoral activities; and PROMOVARE which seeks to boost resilience to food crises for communities in the 10 communes by harnessing water resources for small-scale irrigation. Furthermore, the implementation of planned rural sector reforms will facilitate attainment of the objectives of the Project Water Mobilisation Project to Enhance Food Security in Maradi, Tahoua and Zinder Regions (PMERSA-MTZ) and those of the Rural Water Supply and Sanitation Project in the regions of Dosso and Tillabéry (PAEPAR-2). 3.5. Bank’s Comparative Advantages and Added-Value In recent years, the Bank has developed sustained expertise in strengthening financial governance and rural development through its operations in several countries. Furthermore, the Bank has sound knowledge and a clear understanding of public finance-related issues. Indeed, it supports the WAEMU Commission in its vast public finance reform drive by funding the Regional Public Procurement Reform Project (PRMP-WAEMU). This budget support operation will therefore enable the Bank to participate actively and make a relevant contribution to the dialogue on reform implementation in Niger. The Bank’s experts will be utilized to assist the Government in drafting its strategies. Furthermore, budget support resources will be utilized in particular to ease pressure on the budget in the current context where the country is obliged to spend resources on beefing up its internal security given the deterioration of the security situation in northern Mali. 3.6. Application of Good Practice Principles on Conditionality In accordance with the Bank’s new policy of March 2012 on policy-based operations (PBO), PACIRSA’s design took into account good practice principles on conditionality. Indeed, the conditions precedent to disbursements, which are limited in number, come from national reform documents (i.e. the PRGFP and I3N) and are harmonised as much as possible with those of the World Bank. Besides, during the PACIRSA preparation process, the guiding principles of budget support operations were observed with: (i) ownership of identified reforms, guaranteed by their full compliance with the 2012 and 2013 action plans of the national reform programmes adopted by Niger in the area of public finance management and rural sector development; (ii) implementation of the Programme on the basis of a a results-based logical framework agreed upon with the Government; (iii) Bank support aligned on the country’s budget cycle and whose estimated deadline for disbursement of the 1st tranche coincides with the appropriations for the 4th quarter of 2012; (iv) monitoring of the reforms and conditions provided for under the harmonized common matrix of TFPs; and (v) reinforced mutual responsibility of Niger and the Bank as well as joint monitoring of the common matrix with the other TFP stakeholders.

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IV. PROPOSED PROGRAMME AND EXPECTED RESULTS 4.1. Programme Goal and Objective The Programme’s overall goal is to contribute to the creation of conditions that will foster strong and stable growth in the short and medium-term terms and boost the resilience of the population to food crises, in order to reduce poverty. It targets two main operational objectives. The first objective is to strengthen public finance management by improving domestic revenue collection with a view to increasing investments in priority sectors (especially the private sector) and by boosting public expenditure management efficiency. To that end, the Programme will not only consolidate the gains of PASDRP but also broaden the scope of public finance reforms by addressing persistent difficulties noted in PEMFAR 2009 and by helping Niger to internalize the six new directives of WAEMU's harmonised public finance framework. The second objective is to boost the country’s resilience to food crises by improving agro-pastoral sector governance and promoting an enabling business environment for the development of agro-pastoral sub-sectors, which represent an opportunity to create added-value and considerable youth employment potential. 4.2. Expected Programme Components and Results 4.2.1. To achieve the above-mentioned objectives, the programme has been broken down into two components, namely: (i) Component A: "Optimisation of the Budget Policy and Management" and (ii) Component B: "Boosting the Country’s Resilience to Food Crises". The efficient implementation of reforms supported by these two components will promote macro-economic framework stability and inclusive growth by helping to create conditions conducive to the increase and sound management of public revenue, and by supporting the establishment of the foundations for sustainable food security through efficient crisis management mechanisms and especially the implementation of backbone reforms needed to boost rural sector resilience to disasters and the vagaries of climate. Given the structure of Niger’s economy which is dominated by the rural sector, controlling agro-pastoral production within a context of sound public finance management is critical to macroeconomic stability and, consequently, the consolidation of growth. Indeed, an improvement in the country’s agricultural performance will help to narrow the trade balance deficit and ensure better control of imported inflation. Furthermore, the development and promotion of agricultural sub-sectors will help to increase domestic revenue through induced taxes. Component A: Optimisation of Budget Policy and Management 4.2.2. Public finance management is still plagued by significant shortcomings that undermine its efficiency. This situation is a major concern for Niger. The key elements in the drive to achieve the growth and poverty reduction objectives contained in SDRP 2008-2012 and maintained in PDES 2012-2015 mainly relate to the improvement of public finance management by instituting: (i) an efficient tax system that improves domestic revenue collection; (ii) adequate public spending policies that yield tangible results in the field; (iii) a transparent budget process that efficiently reflects the government’s public spending policies; (iv) a public finance and public procurement system that ensures efficient budget execution; and (v) adequate external and internal mechanisms. To support the Government in this regard, Component A is structured around two sub-components: the first seeks to improve domestic revenue collection and the second is aimed at improving transparency and efficiency in the execution of the expenditure chain.  4.2.3 Sub-Component A1: Improvement of Domestic Revenue Collection Context and Rationale: The PEMFAR II report whose diagnosis was presented in PRGFP 2011-2014 reveals that public spending management in Niger was undermined by the inadequacy and irregularity of domestic revenue collection. Indeed, in 2011, tax revenue peaked at 14.9% of GDP, well below the

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17% target set by the WAEMU convergence criteria. 4.2.4 Furthermore, the gap between projected and actual revenue ranges from 12% to 23%. Apart from the size of the informal sector within Niger’s economy, this situation stems mainly from the weakness of the revenue collection system. The current taxation system is inefficient and characterized by a multiplicity of taxes and a narrow tax base. Moreover, the complexity and bureaucratic nature of customs procedures heavily undermines the performance of customs services which remains well below the estimated potential of Niger’s economy. Improving the organisation of customs and taxation services is a real challenge for achieving a significant increase in domestic revenue. Furthermore, shortcomings were also identified in the collection of tax and non-tax revenue, most of which is freely collected by the other financial services (DGI and DGD) and public establishments (EPAs) and is thus beyond the control of the General Directorate of the Treasury. Domestic revenue will also be improved by effectively restoring the prerogatives of the Treasury in public revenue collection and receipt. 4.2.5. Recent Government Actions: As regards the improvement of domestic revenue collection, the Government embarked on a broad tax reform programme that led to the adoption by the National Assembly of a bill on the new general tax code in June 2012. Apart from consolidating the tax system reforms initiated in recent years, the enforcement of this new code will also improve tax system transparency by compiling previously scattered legislative and statutory rules into a single document that is both coherent and accessible to users. It will also make it possible to update tax regulations by repealing obsolete texts that are mutually incompatible or inconsistent with community or international commitments. At the same time, the Government initiated the transposition process for the Kyoto Convention which focuses on essential principles for simplified and harmonized customs systems that guarantee the protection of customs revenue. Furthermore, the new DGTCP structures responsible for revenue collection in accordance with WAEMU directives (separation of the functions of payments, revenue and management) were established under the previous PASDRP budget support and they are still being operationalised through a series of measures under PRGFP 2011-2014. These include the appointment of tax and customs revenue officers in May 2012 as public accountants so that the revenue they collect is directly recorded in the books and reflected in the general balance of the Chief Revenue Officer of the Treasury with a view to producing an exhaustive management account. 4.2.6. Actions Scheduled Under PACIRSA: The measures retained under sub-component A1 to improve domestic revenue collection are: (i) promulgation, publication and dissemination of the new general tax code among users to sensitize and inform them; (ii) reorganization of the General Directorate of Taxation to improve taxpayer management; (iii) effective transposition of the Kyoto Convention and consequent revision of the General Customs Code; (iv) installation and effective assumption of duty by the 20 (twenty) tax and customs officers who have already been appointed as public accountants; (v) adoption and transmission to Parliament of the bill amending Ordinance No. 2010-015 to create the General Directorate of the Treasury and Public Accounting that includes the State portfolio among the responsibilities of the DGTCP to improve the collection of State dividends and non-tax revenue from State-owned companies and other public services. This last measure which is critical to the improvement of revenue collection was retained as a condition precedent to disbursement of the 2nd tranche of this budget support in 2013. 4.2.7. Expected Results: The main expected results from this Sub-Component A.1 of the Programme are: (i) an increase in the tax-revenue-to-GDP ratio from 14.9% in 2011 to 17% in 2013; and (iii) a reduction in the gap between total revenue collected and budget projections (total revenue collected as a percentage of budget projections increases from 72% in 2011 to 80% in 2013) and (iii) an improvement in the basic budget balance (net of grants) from -4.2% of GDP in 2011 to -1.6% of GDP in 2013.

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Sub-component A2: Improvement of Transparency and Efficiency in the Execution of the Public Expenditure Chain 4.2.8. Context and Rationale: A key element for promoting greater government accountability to citizens is increased transparency in the budget process and efficient public spending. The PEMFAR II report revealed a level of public expenditure transparency and efficiency in Niger that is below the regional average. 4.2.9. Niger’s constitution contains key provisions that guarantee greater transparency within the mining sector. Continuing with the EITI process is one important way of addressing the aspirations raised by the new constitution. The Government of Niger has made significant progress in transparent management and public disclosure of revenue generated from mining. Niger’s compliance with EITI standards and norms was deemed very satisfactory. Hence, it became the first francophone African country to complete the EITI validation process on 1 March 2011. After this validation stage, the remaining challenge is greater involvement of civil society in the debate on extractive industries. 4.2.10. With respect to internal control, substantial progress has been made in recent years with the establishment of external control institutions such as the Court of Auditors and the Public Procurement Regulatory Authority. 4.2.11. As regards internal control, there are well-established rules and procedures for controlling the execution of expenditure, but their efficiency is undermined by a lack of control tools, redundant controls and administrative bottlenecks. Moreover, the control services do not have adequate resources to satisfactorily perform their duties. Strengthening the General Directorate for Financial Control (DGCF) and decentralizing internal control will help to prevent public procurement fraud. 4.2.12. Efficiency in the execution of the public expenditure chain was reinforced by establishing an investment planning and management system through the design of general medium-term expenditure frameworks (MTEFs) that guided the preparation of the 2011 and 2012 budgets. The next stage will be the gradual production of sector MTEFs that are consistent with the general MTEF. 4.2.13. Recent Government Actions: The Bank, through PASDRP, supported the Government in the revision of the public procurement code in accordance with WAEMU directives. The revised Code as well as the public procurement code of ethics and public service delegations were adopted by decree in December 2011. A Court of Auditors that is independent of the Supreme Court was also established in 2010. Furthermore, in December 2011, an organic law governing finance laws, in conformity with the new WAEMU directives of 2009, was adopted. About 10 out of the 20 enabling orders provided for in the Procurement Code were signed in June 2012. The public procurement audits of 2007 and 2008 were conducted by ARMP and published. The establishment of public procurement divisions within technical services became effective in June 2012. Furthermore, in addition to the cash flow committee, the Government set up a steering committee on budget regulation that controls and produces quarterly reports on the release of appropriations. The work of these two committees should help to curb payment arrears. 4.2.14. Actions Scheduled Under PACIRSA: This sub-component will support the improvement of transparency and efficiency in the execution of the public expenditure chain. The reforms supported to ensure budget management transparency are: (i) regular publication of the budget law and budget review laws on the website of the Ministry of Finance; (ii) regular production and publication of Extractive Industries Transparency Initiative (EITI) reports; (iii) regular presentation of accounts by reducing delays in the consideration of draft budget review laws by the end of 2013. The adoption by Government and transmission to the Court of Auditors of the 2008 and 2009 draft budget review laws was retained as a condition precedent to disbursement of the 1st tranche of this budget support in 2012. On efficiency in the execution of the public expenditure chain, the supported reforms are: (i) transposition of the five WAEMU public finance directives into Niger’s laws; (ii) the preparation of a

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phased decentralization programme by creating DGCMP branches at the central, regional and district levels; (iii) establishment of the Integrated Public Procurement Management System (SIGMAP) to enable the DGCMP prepare reliable statistics in the short term; (iv) establishment of a physical and/or electronic filing system for documents; (v) adoption of the remaining enabling instruments for the public procurement code and conduct by the ARMP of the public contract audits of 2009-2010 in 2012 and of those of 2011 in 2013; (vi) operationalization of the toll-free number established for denunciation of cases of public procurement fraud and corruption; (vii) preparation of a general public procurement capacity-building strategy; (viii) preparation of an annual report by the Financial Control Service as well as verification of services provided; (ix) improvement of public investment planning and management through regular preparation of a general and progressive MTEF for sector MTEFs; and (x) decentralization of financial control. This last measure which is of capital importance for enhancing the efficiency of the public expenditure chain was retained as a condition precedent to disbursement of the 2nd tranche of this budget support. The Government is expected to appoint and install decentralized financial controllers in the 8 (eight) regions of the country by 2013. 4.2.15. Expected Results: The main expected results from this Sub-Component A.2 of the Programme are: (i) capacity-building for DGCF measured by an increase in the number of regions covered by DGCF which rises from 1 in 2011 to 8 in 2013; (ii) implementation of the new general public procurement code through adoption of enabling instruments; (iii) an increase in the absorptive capacity of sector ministries, in particular an increase in the consumption rate of budget appropriations for rural sector investment (agriculture, stockbreeding, environment, community development, water supply) which more than doubled from 25.9% in 2009 to 50% in 2013; (iv) an improvement in budget credibility measured by the closing of the gap between real expenditure and budget estimates which expands from 78% in 2011 to 85% in 2013). Component B: Boosting the Country’s Resilience to Food Crises 4.2.16. The rural sector is the main engine of economic growth in Niger with 40% of total export earnings, 85% of the labour force and approximately 40% of GDP on average (comprising 27% for agriculture, 9% for stockbreeding and 4% for forestry and fisheries). However, it is characterised by severe and highly variable climatic conditions and low productivity that greatly expose the rural population to poverty as well as a highly negative trade balance for agricultural products that accounts for 28% of the total trade balance deficit. The stockbreeding sector, with an estimated national animal population of 31 million, produces the country’s second leading export after uranium and is the main source of income for a huge segment of the population. The national fishery output is evaluated at 50.058 tonnes, with rainfall conditions having a great impact on potential. Changing from rain-fed farming to irrigation farming, developing climate resilience programmes and increasing and diversifying agro-silvo pastoral and fishery production are challenges that Niger intends to address in order to address its highly volatile economic growth rate and guarantee substantial income for rural communities. The sector reforms planned under I3N programmes in the areas of agriculture, stockbreeding, water supply, environment and climate resilience all target this objective. By supporting the Government in these efforts, Component B contributes to reinforcement of the country’s resilience to food crises by helping to create conditions conducive to efficient I3N implementation, improving rural sector governance (Sub-Component B1) and promoting a business environment that is conducive to the development of agro-pastoral sub-sectors (Sub-Component B2). It also helps to promote employment for youth and women in rural areas.

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Sub-Component B1: Reinforcement of Agro-pastoral Sector Governance

4.2.17. Context and Rationale: Over the last 50 years, Niger has experienced very frequent cereal deficits (every other year, on average).vii Each year, over 10% to 30% of the population experiences cereal deficits.viii The 2011-2012 crop year was characterized by a cereal deficit of approximately 700,000 tonnes. I3N which seeks to address the food security challenge is essentially geared towards the development of available irrigable land and modernization of agriculture and stockbreeding. However, Niger does not yet have a strategy for developing small-scale irrigation or a livestock sustainable development strategy. Furthermore, there is no seed and agricultural input supply policy even though the improvement of productivity calls for, inter alia, the facilitation of access to inputs. 4.2.18. Recent Government Actions: The Government's main action has been the adoption in April 2012 of a new strategy called I3N ("Nigeriens feed Nigeriens") for the 2012-2015 period. 4.2.19 Actions Scheduled Under PACIRSA: The main reforms supported under this sub-component over the 2012-2013 period relate to the following two aspects:

• The development of available irrigable land and modernization of agriculture and stockbreeding. The supported reforms concern: (i) the adoption and operationalisation of the small-scale irrigation strategy (SPI); (ii) the adoption and operationalization of the livestock sustainable development strategy (SDDE); (iii) the adoption and operationalization of the sustainable land management strategic framework (CSGT); (iv) the establishment of an institutional framework for I3N implementation; and (v) the adoption and operationalisation of the seed policy. Adoption of the seed policy was retained as a condition precedent to disbursement of the 1st tranche of the budget support in 2012. Operationalisation of the seed policy is expected in 2013. The Government is expected to adopt an agricultural input supply action plan. Productivity can only be improved through facilitation of access to inputs. This measure was retained as a condition precedent to disbursement of the 2nd tranche of budget support in 2013.

• Improvement of the Environmental and Social Governance of the Agro-Pastoral Sector. The scheduled reforms focus on: (i) the development of I3N environmental and social management tools including the conduct of an I3N strategic environmental assessment; (ii) preparation of an action plan for inclusion of climate change in I3N; (iii) adoption of a meteorological assistance plan for the irrigation season in Niger; (iv) extension of the land tenure security and management mechanism to communes and Departments; (v) establishment of a water resource information and quality monitoring system; and (vi) mainstreaming of the gender dimension by adopting an action plan to improve access to I3N resources for women and youths, as well as an update of the gender policy to include the climate change dimension. This action plan will include the employment dimension for rural youth and women. The same applies to the strategies that will be developed for irrigation and stockbreeding.

4.2.20. Expected Results: The main results expected from this Sub-Component B1 are: (i) the adoption of SPI and the seed policy in order to increase seed production; (ii) adoption of the SDDE to ensure better safeguards for the stockbreeding sub-sector; (iii) adoption of the CSGDT; (iv) appropriate environmental and social management of I3N programmes; (v) inclusion of climate change in I3N programmes; (vi) regular monitoring of water resources mainly by establishing a national laboratory and upgrading eight regional laboratories; (vii) better land tenure security and

vii Source: HC3N: I3N Strategic Framework (Nigeriens feed Nigerien) – Working Document – December 2011 viii Source : PDES 2012 - 2015

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management through the establishment of 36 COFOCOMs and 27 COFODEPs; (viii) operationalization of the I3N institutional steering mechanism; (ix) increase of women’s labour force participation rate from 39% in 2009 to 50% in 2013; (x) operationalization of the SPI, SDDE and CSGT under the 2012-2013 food security emergency programmes. 4.2.21. Sub-Component B2: Improvement of the Business Environment and the Competitiveness of the Agro-pastoral Sectors 4.2.22. Context and Rationale: Niger’s rural economy is characterized mainly by its weak capacity to develop agro-pastoral and fishery products. Indeed, very few products are processed locally before being released for consumption or marketing. This situation greatly limits the creation of value-added. The main cause of this situation is the absence of an adequate marketing system at the national and international levels. As is the case in other productive sectors of the economy, the development of agricultural products is also handicapped by insufficient supply of adequate economic services. Indeed, according to the World Bank’s "Doing Business 2012" Report, Niger ranks 173rd out of 183 countries, as regards ease of doing business. For trade especially, the number of documents required for export preparation was 8 in 2011 (7.7 on average in Sub-Saharan African countries) and the number of documents required for import preparation was 10 in 2011 (8.7 on average in Sub-Saharan African countries). High transport costs, numerous procedures and lengthy police, customs and gendarmerie formalities are an impediment to the development of national and international trade. Given the weight of rural sub-sectors within the economy (cattle is the 2nd major export after uranium) and the vast economic potential they could generate under optimum conditions, Niger absolutely has to implement reforms that boost their development and improve their competitiveness, mainly by eliminating constraints to cross-border trade and encouraging private initiatives to establish processing units. 4.2.23. Recent Government Actions: The Government prepared a preliminary national policy document on trade promotion that lays great emphasis on the promotion of agro-pastoral products. Similarly, it started the preparation of a new investment code in 2008. The retained strategy focuses on streamlining procedures and introducing facilities and cost reductions (taxes, access to credit and land tenure). Furthermore, a new institutional mechanism for improving "Doing Business" indicators was set up with a technical committee responsible for national and international trade facilitation matters. A "Business Centre" was also established by decree in May 2012 to facilitate starting a business. 4.2.24. Actions Scheduled under PACIRSA: To contribute to this agro-pastoral sub-sector promotion drive, this sub-component will, over the 2012-2013 period, support: (i) finalisation and adoption of the national trade promotion policy; (ii) reform of import-export procedures in order to reduce the number, deadlines and cost of export and import documents; (iii) adoption of the new investment code; and (iv) creation and operationalization of the Business Centre at the Chamber of Commerce, Industry and Handicrafts of Niger. 4.2.25. Expected Results: The main expected results for Component B.2 include: (i) a reduction in the number of documents required for export (from 8 in 2011 to 6 in 2013) and import (from 10 in 2011 to 8 in 2013); (iii) an increase in exports of cattle on the hoof to Nigeria by at least 50% between 2011 and 2013; (iii) an improvement in the trade balance from -15.6% in 2011 to -7.9% in 2013. 4.3. Financing Requirements and Financing Arrangements The total revenue projections for 2012 are CFA.F 606 billion compared to actual expenditure of CFA.F 994.7 billion. Hence, the financing requirements are CFA.F 398.7 billion (including payment of arrears), or approximately 11.6% of GDP. The ADF contribution in 2012 is UA 11.56 million, or approximately CFA.F 9.151 billion. Macroeconomic planning for 2013 shows a financing

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requirement of CFA.F 474.1 billion, part of which will be covered by the second tranche representing CFA.F 7.916 billion.

Table 3: 2011-2013 Budget Balance and Financing Requirements (in CFA.F billion)

Items 2011 2012 2013 Total revenue, including: 445.0 606.0 693.0 Tax revenue 423.6 539.8 657.1 Non-tax revenue 21.4 66.2 35.9 Net expenditure and loans: 770.9 994.7 1152.1 Recurrent expenditure 420.4 412.2 493.6 Capital expenditure and net loans 350.5 582.5 658.5 Budget balance (commitment basis) -325.9 -388.7 -459.1 Variation of arrears -8.0 -10.0 -15.0 Deficit (cash basis) -333.9 -398.7 -474.1 Financing 333.9 381.9 457.4 Domestic financing -6.8 -48.2 -9.7 External financing 340.7 430.1 467.1 Financing gap (+) 0.0 16.8 16.7

Source: Government of Niger, IMF (May 2012) and staff estimates (June 2012) 4.4. Programme Beneficiaries The end beneficiaries of the programme are the people of Niger, especially the rural population which accounts for 79.6% of the total population, representing over 12.5 million people. The intermediate beneficiaries are private economic operators who will enjoy an improved business environment that is conducive to national and international trade as well as public finance management transparency achieved through public procurement reform. 4.5. Macroeconomic Impact and Impact on Governance Improved efficiency in public expenditure management and increased productivity and agricultural output will help to guarantee the stability of the macroeconomic framework. The programme targets a GDP growth rate of 5% in 2013. The basic budget deficit will decline to -1.6% of GDP in 2013 compared to -4.2% in 2011 while the balance of payments current account deficit will stand at -20.6% of GDP in 2013 compared to – 28.3% of GDP in 2011. Inflation will be contained at 2% in 2013. 4.6. Impact on the Business Environment Certain actions supported by the programme contribute to the improvement of Niger's business environment. These are: the adoption and promulgation of the new investment code, the adoption of a new national trade promotion policy, the creation of a Business Centre, and the preparation of an action plan to reform import-export procedures. Consolidating transparency and efficiency in the execution of the expenditure chain by reforming the procurement system is also critical to the improvement of the business environment. Such improvement of the business environment will lay the foundations for diversification of Niger’s productive sector, which is currently dominated by mining industries alone. 4.7. Impact on Poverty and Gender Improved domestic revenue collection and an increased share of priority sector spending in the budget will lead to an improvement in the living conditions of the people. Better agro-pastoral sector governance will raise the people's incomes and consequently boost their resilience to food crises. Implementation of the action plan to involve women and youth in I3N programmes and the creation of new job opportunities in the agro-pastoral sector will reduce their vulnerability and contain rural-urban migration among the youth. Implementation of the reforms will lead to the creation of approximately 7,000 direct and 35,000 indirect jobs. The set target is to reduce the food and nutrition vulnerability index from 15% in 2011 to 13% in 2013 by applying measures supported by the programme.

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4.8. Environmental Impact PACIRSA is classified in Category 3 and consequently is not subject to an environmental assessment in accordance with Bank procedure. However, it will promote the improvement of environmental governance by developing the environmental and social management tools of I3N programmes, extending the land tenure security and management mechanism, promoting social equity and strengthening the network for monitoring impact on water resources. 4.9. Climate Change PACIRSA should boost Niger's resilience to climate change and promote the institutionalisation of the irrigation farming season. The programme is fully in keeping with the priority focus areas of Niger’s NAPA (National Adaptation Action Plan) 2006, and with those of NAMA (National Mitigation Action Plan of Niger) prepared in 2011 with Bank support. V. IMPLEMENTATION, MONITORING AND EVALUATION 5.1. Implementation Arrangements 5.1.1. Competent Institution: The General Directorate for the Economy, Forward Planning and Evaluation (DGEPE) of the Ministry of Planning will be responsible for PACIRSA implementation. This directorate is also responsible for coordinating the implementation of the World Bank’s budget support programme. It will be responsible for transmitting to the Bank: (i) the quarterly status reports on PASCACAF implementation; (ii) budget implementation reports; (iii) management accounts; and (iv) the budget review laws and general report of the Court of Auditors. Furthermore, provision is made for the Government to adopt the order to create, organize and define the duties of the institutional mechanism for coordination of economic and financial programmes that will comprise an inter-ministerial committee and a technical committee. Adoption of the instruments governing this mechanism is one of the conditions for presentation of the Programme to the Bank's Board of Directors. 5.1.2. Disbursement: The financing proposed under the programme as a loan of UA 21.56 million will be disbursed in two tranches of UA 11.56 million in 2012 and UA 10 million in 2013. Disbursement of the tranches shall be subject to fulfilment of the conditions precedent indicated below. The funds shall be disbursed into a special Public Treasury account opened at the BCEAO national branch in Niamey. 5.1.3. Procurement Arrangements: The loan will be granted as general budget support. Consequently, its implementation does not raise any direct procurement issues. It should be noted, however, that the national public procurement system review conducted by the Bank in 2010 and updated during the PACIRSA appraisal mission (cf. Technical Annex No. 2) concluded that the new regulations mostly comply with international standards and the Bank’s policy. 5.1.4. Financial Management and Audit: PACIRSA’s financial management and audit arrangements stem from a fiduciary risk assessment of the public finance management system detailed in Technical Annex 2. Since PACIRSA resources will be deposited into a special Public Treasury account opened at BCEAO in Niamey, external audit of the use of funds will be done within the framework of the external audit of public spending conducted by the Court of Auditors. A copy of the draft budget review law should be transmitted to the Bank at the same time as this draft law is tabled before the National Assembly. Nevertheless, the Court of Auditors shall carry out an annual audit of the financial flows of the special account opened in the name of the Public Treasury for the payment of loan resources. This report must be transmitted to the Bank no later than 30 June following the end of the fiscal year during which the resources were disbursed.

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5.2. Monitoring and Evaluation Arrangements Results Monitoring/Evaluation: Monitoring/evaluation shall be conducted through the institutional budget support monitoring mechanism that will be set up. The PRGFP implementation matrix and the ADB/WB/EU common matrix will be used. PACIRSA implementation will also be monitored through half-yearly and annual implementation reports. The Bank will conduct at least two annual programme supervision missions. VI. LEGAL DOCUMENTS AND LEGAL AUTHORITY 6.1 Instruments The financing instrument proposed under the programme is a loan. The loan agreement will be signed between the African Development Fund and the Republic of Niger.  6.2 Conditions Associated with Fund Intervention A- Conditions Precedent to Programme Presentation to the Board of Directors 6.2.1. Before the proposed programme is presented to the Bank’s Board of Directors for approval, Niger must provide proof that the measure relating to adoption by the Government of texts governing the organisation and functioning of national mechanisms for coordination of official development assistance and monitoring/evaluation of budget support and financial/economic reforms, has been implemented. B - Conditions Precedent to Loan Effectiveness 6.2.2. The loan agreement shall become effective subject to the Borrower’s fulfilment of the conditions provided for in Section 12.01 of the Fund’s General Conditions for Loan Agreements and Guarantee Agreements B - Conditions Precedent to Disbursement 6.2.3. Disbursement of the first loan tranche (UA 11.56 million) will be subject to fulfilment by the borrower, in form and substance, of the following 3 (three) specific conditions:

1. Opening of a special account in the name of the Public Treasury at the main BCEAO branch in Niamey for the payment of the loan resources (Paragraph 5.1.2);

2. Adoption by the Government and transmission to the Court of Auditors of the 2008 and

2009 budget review draft laws (Paragraph 4.2.14). Proof required: A Communiqué of the Council of Ministers adopting the draft budget review laws and the Letter transmitting the 2008 and 2009 draft budget review laws to the Court of Auditors.

3. Adoption by the Government of Niger’s seed policy (Paragraph 4.2.19). Proof

required: Communiqué of the Council of Ministers adopting Niger's seed policy paper. 6.2.4. Disbursement of the second loan tranche (UA 10 million) will be subject to satisfactory review of the implementation of programme measures supported by the IMF's Extended Credit Facility (ECF), the satisfactory assessment of the implementation of reforms supported in 2012 in the programme and fulfilment by the borrower, in form and substance, of the following 3 (three) specific conditions:

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1. Adoption by the Government and transmission to Parliament of the bill amending

Ordinance No. 2010-015 to create the General Directorate of the Treasury and Public Accounting in order to include monitoring of the State portfolio among its duties (Paragraph 4.2.6). Proof required: Communiqué of the Council of Ministers adopting the bill to amend Ordinance No. 2010-015 to create the General Directorate of the Treasury and Public Accounting in order to include monitoring of the State portfolio among its duties as well as the letter of transmission to Parliament.

2. Appointment and installation by the Government of decentralized financial controllers

in the 8 (eight) regions (Paragraph 4.2.14). Proof required: Certified true copy of the orders appointing the financial controllers of the eight regions and certified true copies of the minutes of the minutes of their swearing-in.

3. Adoption by the Government of an agricultural input supply action plan (Paragraph

4.2.19). Proof required: Communiqué of the Council of Ministers adopting an agricultural input supply action plan.

6.3 Compliance with Bank Group Policies This programme complies with all applicable policies and guidelines of the Bank group, especially: the new policy of March 2012 on Policy Based Operations (PBO), the the Bank’s Strategic Directions and Governance Action Plan (GAP). for 2008-2012. The programme is also consistent with Niger’s country strategy paper. VII. RISK MANAGEMENT The main risks that could affect attainment of programme results and their mitigation measures are presented in Table 4 below.

Table 4: Risks and Mitigation Measures

Risk Probabiliy of risk

Mitigation Measures

Macroeconomic instability

Moderate The main macroeconomic risk is the country’s high economic vulnerability to climatic shocks (droughts) that has an impact on agriculture and stockbreeding, and the fluctuation of external demand for its main export product (uranium). To mitigate this risk, the Government has resolved to continue with economic diversification and the implementation of economic reforms. To that end, the Government is implementing an Extended Credit Facility (ECF) programme for 2012-2015 with the IMF.

Fiduciary risks Moderate Analysis of the fiduciary risk is detailed in Technical Annex 2. Diagnostic studies reveal that Niger’s public finance management system still has shortcomings. The main risks identified and for which mitigation measures must be prescribed are: (i) transfer risk; (ii) unplanned execution risk; (iii) risk of non-registration; (iv) risk of non-optimal resource use; and (v) risk of failure to present accounts. The following mitigation measures to the above risks were raised/recommended jointly with Niger’s authorities: (i) continue with the implementation of public finance management reform; (ii) comply with the conditions precedent for the two disbursement tranches; and (iii) transmit to the Bank the draft budget review laws of the Court of Auditors for the years covered by this budget support.

Weakcapacity to conduct reforms

Moderate Partners provide institutional support and technical assistance to address the problem of limited capacity and this is critical to the mitigation of this risk. The Bank has just adopted a new project aimed at building public financial management capacity.

Security risk at the regional level

Substantial There is a major risk relating to insecurity along the border with Mali and Libya that could contribute to the reversal of national priorities and consequently modify the frequency and volume of appropriations in the execution of the budgets of sectoral ministries. Furthermore, it could unduly delay the implementation of public finance and sectoral reforms retained under the programme. However, the mission noted the willingness of the authorities to reconcile development priorities with security concerns by pursuing reforms while strengthening security.

Lack of coordination

Moderate One operational risk factor relates to the absence of an institutional framework for coordinating and monitoring the implementation of reforms covered by budget support. Institutional arrangements jointly agreed upon with the Government and technical and financial partners under the Public Finance Management Reform Plan (Steering Committee, Technical Committee and the Government-TFP Joint Secretariat) have still not yet been implemented. This situation creates inefficiency. The authorities have given the assurance that measures will be taken to establish this institutional framework.

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VIII. RECOMMENDATION It is recommended that the Board of Directors approve a loan, not exceeding UA 21.56 million, for the Government of the Republic of Niger to finance the Support Programme for Inclusive Growth and the Strengthening of Food Security and subject to the conditions set out in this report.

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General and Technical Prerequisites

Prerequisites: Comments

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Government commitment to poverty reduction

Niger has a medium-term development strategy. Since the Development and Poverty Reduction Strategy (SDRP 2008-2012) will be concluded at the end of 2012, the country has adopted a new medium-term strategy, namely the Economic and Social Development Plan (PDES 2012-2015) which will be the reference framework for Government action and the operations of technical and financial partners (TFPs). The Government has shown a strong

Macroeconomic stability

The IMF’s ex post assessment in November 2011, deemed Niger’s performance in the implementation of IMF supported reform programmes over the 2005-2011 period to be satisfactory, despite suspension of the implementation of the Extended Credit Facility (ECF 2008-2011) in 2010, because of the coup d’état. Article IV discussions started between Niger and the IMF in 2011, led to the establishment of a new ECF-supported programme for 2012-2015 in March 2012. In its letter of intent written to the IMF, Niger undertook to continue with the necessary reforms, especially the optimisation of its budget policy and its debt management with a view to supporting investments that are indispensable to the country’s development.

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Fiduciary Risk Assessment

Recent diagnostic and analytical studies, mainly PEFA and PEMFAR II conducted in 2008 and 2009 respectively, have revealed that Niger’s public finance management system has shortcomings as well as many challenges in terms of budget credibility and transparency, the efficiency and efficacy of internal control mechanisms, presentation of national accounts within the prescribed deadlines and external controls by the Court of Auditors and Parliament. However, substantial efforts were made by the authorities over the last few years to improve public finance management and mitigate fiduciary risks. Indeed, the Government prepared a new public finance management reform programme (PRGFP) for 2011-2014 that is being implemented. The main reforms implemented include: (i) the adoption in 2011 of the new public procurement code and the establishment of the various control structures (Public Procurement Regulatory Authority (ARMP) and the Directorate of Public Procurement Control (DGCMP); (ii) conduct by ARMP of the public procurement audits for 2007 and 2008, and preparation of an action plan to reduce the delay for 2009-2010 by the end of 2012; and (iii) revision of the approval threshold for contracting authorities from CFA.F 300 million to CFA.F 100 million. Furthermore, the Court of Auditors reviewed the accounts for FY1999 to FY2007 and is trying to reduce the delay in the review of State accounts from 2008 to 2010 by 2014 latest. Lastly, the High Authority to Combat Corruption and Associated Crimes was established and it has commenced its activities.

Political stability Niger’s political situation is considered stable. Indeed, following the military coup d’état of February 2010, the transitional government’s road map to return to democracy led to presidential, municipal and legislative elections in March and April 2011 that were deemed to be free and fair by the international community. Since April 2011, there has been a return to normal constitutional order and the effective establishment of all the institutions of the Republic in accordance with the Constitution.

Harmonisation A joint budget support harmonisation framework including the World Bank, European Union and the African Development Bank is being established. A joint matrix of the various supported reforms is being finalised. The main conditions for disbursement of the 1st budget support tranche are being harmonised with those retained as conditions precedent to the second budget support of the World Bank that should be fulfilled by December 2012.

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LETTER OF DEVELOPMENT POLICY

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MATRIX OF MEASURES FOR THE 2012-2013 PROGRAMME Objectives / Strategic pillars

Baseline situation as of end-June 2012 Supported Measures and Actions Output indicators Outcome indicators

Source of verification of the implementation of measures 2012 2013

Component A: Optimisation of Budget Policy and ManagementA.1 Improvement of Domestic revenue Collection

The taxation system is inefficient. It is characterised by a plethora of taxes and a narrow tax base. A tax reform drive has been initiated in the country.

Adoption and promulgation of a new general tax code.

Publication and dissemination of the new general tax code among users to sensitize and inform them

A new general tax code enters into force in 2013

The basic budget balance (net of grants) improves from -4.2% of GDP in 2011 to -1.6% of GDP in 2013. The tax revenue to GDP ratio rises from 14.9% in 2011 to 17% in 2013. Proportion of total revenue collected relative to budget estimates rises from 72% in 2011 to 80% in 2013.

Decree promulgating the law on the general tax code. New code published.

The current organisation of the tax administration is not conducive to the improvement of its performance and especially to the management of taxpayers. Reorganisation of the various services of the Ministry of Finance, which has started, has not yet been completed.

Adoption by the Minister of Finance of the draft order to reorganize the general directorates of the Ministry of Finance.

Reorganisation of the services of the DGI to improve taxpayer management

The general directorate of taxes is more efficient in revenue collection and taxpayer management.

Order to reorganize the general directorates of the Ministry of Finance. Organisation chart of the DGI.

The revenue collected by tax and customs revenue collectors is not reflected in the books of the General Revenue Officer of the Treasury. The 20 (twenty) tax and customs revenue officers appointed as public accountants (Order No. 0183 of 14 May 2012) have not yet assumed duty.

Installation of the 20 (twenty) tax and customs revenue officers as public accountants

Production of the general balance of the Chief Revenue Officer (including the revenue accounts of tax and customs revenue officers) as of 30 September 2013 with a view to producing the complete management account of the Chief Revenue Officer of the Treasury.

The revenue accounts of the tax and customs revenue officers are produced and factored into the general balance of the Chief Revenue Officer of the Treasury as of 30 September 2013 for preparation of the complete management account.

Minutes of swearing-in of tax and customs revenue officers. General balance of the Chief Revenue Officer of the Treasury as of 30 September 2013.

The revised Kyoto Convention has not yet been ratified by Niger.

Adoption of the revised Kyoto Convention by the Government and its transmission to the National Assembly

Transposition of the provisions of the revised Kyoto Convention to the General Customs Code

General customs code revised including the provisions of the Kyoto Convention at the end of 2013.

Communiqué of the Council of Ministers adopting the revised Kyoto Convention. Letter of transmission of the revised Kyoto Convention to the National Assembly. General customs code revised including the provisions of the Kyoto Convention.

State-owned companies receive State subsidies. However, they do not pay due dividends to the State. The Ministry of Finance’s capacity to monitor state-owned companies is very limited. Furthermore, non-tax revenue collected by other government services is not paid into the accounts of the General Directorate of the Treasury.

Adoption and transmission to Parliament of the bill amending Ordinance No. 2010-015 to create the General Directorate of the Treasury and Public Accounting in order to include the State portfolio among the responsibilities of the DGTCP.

Adoption of the orders creating and operationalizing the new structures of the DGTCP.

The directorate responsible for state-owned companies and establishments is created within the DGTCP before the end of 2013. The non-tax revenue collected by the other public services is paid into the Treasury accounts during 2013.

Communiqué of the Council of Ministers adopting the bill. Letter of transmission of the bill to Parliament.

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Objectives /

Strategic pillars

Baseline situation as of end-June 2012 Supported Measures and Actions Output indicators Outcome indicators Source of verification of the implementation of measures 2012 2013

Component A: Optimisation of Budget Policy and Management A.2. Improvement of Transparency and Efficiency in the Execution of the Public Expenditure Chain

One of the six directives designed for the public finance harmonised framework within WAEMU was adopted (namely, the organic law governing budget laws, adopted by the National Assembly on 29 December 2011).

Transposition of the other five new directives of 2009 for the harmonized public finance framework within WAEMU relating to: (i) the public finance management transparency code; (ii) general regulations of public accounting; (iii) State budget nomenclature; (iv) accounting plan; (v) TOFE.

All the new directives of the harmonized public finance framework within WAEMU are transposed into the national laws before the end of 2012.

The consumption rate of budget appropriations in rural sector investments (agriculture, stockbreeding, environment, land-use planning and community development, water supply) doubles from 25.9% to 50% in 2013. % of executed expenditure relative to budget estimates rises from 78% in 2011 to 85% in 2013. Competition, value for money and controls in procurement PEFA indicator PI-19: B (2008) PI-19: A (2013) Number of regions covered by the DGCMP rises from 1 in 2011 to 8 in 2013. Number of regions covered by the DGCF rises from 1 in 2011 to 8 in 2013.

Texts on transposition of the directives.

The 2010 EITI annual report was produced. Production of the 2011 EITI annual report

Production of the 2012 EITI annual report

EITI report produced annually EITI report The new general public procurement code, consistent with WAEMU directives, was adopted in December 2012. Seven enabling instruments were approved and about ten remain to be approved.

Adoption of all the enabling instruments of the public procurement code

Adoption of the public procurement capacity-building strategy

1.2.2 The enabling instruments of the public procurement code are adopted before the end of 2012. The public procurement capacity-building strategy is adopted before the end of 2013.

Orders of the Prime Minister adopting the enabling instruments of the public procurement code; Order of the Prime Minister adopting the capacity-development strategy.

Niger is lagging behind in the conduct of public procurement audits. The most recent public contracts audited and published by ARMP are those of 2007-2008.

Auditing of the public contracts of 2009-2010 by ARMP

Auditing of the public contracts of 2011 by ARMP

Delays in the auditing of public contracts are reduced by the end of 2013.

Public contract audit reports by ARMP

The General Directorate for Public Procurement Control (DGCMP) has no decentralized organs at the central, regional and Departmental levels.

Preparation of a phased DGCMP decentralization programme by creating branches at the central, regional and Departmentals levels;

The phased DGCMP decentralization programme with the creation of branches at the central, regional and Departmental levels is prepared before the end of 2013.

Programme prepared and transmitted

Lack of reliable public procurement statistics Establishment of the Integrated Public Procurement Management System (SIGMAP)

The Integrated Public Procurement Management System (SIGMAP) is established and operational before the end of 2012.

DGCMP activity report

Lack of a physical and/or electronic filing system for documents.

Establishment of a physical and/or electronic filing system for procurement documents

A physical and/or electronic filing system for procurement documents is established before the end of 2013

DGCMP activity report

The toll-free number attributed by WAEMU to Niger for denunciation by citizens of cases of public procurement fraud and corruption is not yet operational.

Operationalization of the toll-free number established for denunciation of cases of public procurement fraud

The toll-free number for denunciation of cases of public procurement fraud and corruption is operational before the end of 2012.

ARMP activity report

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and corruption.

Objectives / Strategic pillars

Baseline situation as of end-June 2012 Supported Measures and Actions Output indicators Outcome indicators Source of verification of the implementation of measures 2012 2013

Component A: Optimisation of Budget Policy and ManagementA.2. Improvement of Transparency and Efficiency in the Execution of the Public Expenditure Chain

The 2012 budget law was published in the Official Gazette only in May 2012.

Publication of the 2013 budget law in the Official Gazette and on the website of the Ministry of Finance before the end of the 1st quarter of 2013.

The budget law is published in the Official Gazette and on the website of the Ministry of Finance before the end of the 1st quarter of 2013 and is accessible to the public.

Number of regions covered by the DGCF rises from 1 in 2011 to 8 in 2013.

Official Gazette on the 2013 finance law. Copy of the law from the website of the Ministry of Finance.

Niger lags behind in the adoption of budget review laws. The last budget review law adopted relates to the accounts of 2007.

Adoption of the 2008-2009 draft budget review laws at the Council of Ministers and their transmission to the Court of Auditors.

Adoption of the 2010-2011 budget review draft laws at the Council of Ministers and their transmission to the Court of Auditors.

The delays in producing budget review laws are reduced before the end of 2013.

Statement of the Council of Ministers adopting the budget review draft laws. Letter of transmission to the Audit Bench

Annual activity reports of the General Directorate for Financial Control are prepared but do not include certification for services provided.

Preparation of the 2011 annual activity reports of the General Directorate for Financial Control including certification for services provided.

Preparation of the 2012 annual activity reports of the General Directorate for Financial Control including certification for services provided.

The annual activity reports of the General Directorate for Financial Control including certification for services provided are prepared from the end of 2013.

Annual activity report of the General Directorate for Financial Control

The internal control function of public spending is not decentralized. It is currently performed in the regions by treasurers.

Appointment and installation of decentralized financial controllers in the 8 (eight) regions

Financial controllers are decentralized in the 8 (eight) regions before the end of 2013.

Order appointing the decentralized financial controllers by the Minister of Finance and certified true copies of their swearing-in reports.

A guide for the preparation of Medium-Term Expenditure Frameworks (MTEF) is adopted. However, the ministries trained in the preparation of MTEFs did not start the exercise of preparing their MTEFs.

Preparation of the MTEFs of ministries (Education and Health) for the 2013 budget law

Preparation of MTEFs for ministries (Agriculture, Vocational Training, Environment, and Population and women/children’s affairs) for the 2014 budget law

MTEFs for ministries (Education, Health, Agriculture, Vocational Training, Environment, and Population and Women/Children's Affairs) are prepared and included in budget laws from 2013.

MTEF for ministries

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Objectives / Strategic pillars

Baseline situation as of end-June 2012 Supported Measures and Actions Output indicators

Outcome indicators Source of verification of the implementation of measures

2012 2013

Component B: Boosting the Country’s Resilience to Food Crises B1. Reinforcement of Agro-pastoral Sector Governance

Under I3N, Niger adopted the strategic option of promoting the development of irrigation farming, and especially small-scale irrigation. However, the country does not have a small-scale irrigation development strategy.

Technical validation of the small-scale irrigation strategy

Adoption and Operationalisation of the Small-scale Irrigation Strategy (SPI)

Small-scale irrigation strategy (SPI) implemented in 2012 and 2013

Food and nutrition vulnerability index declines from 15% in 2011 to 13% in 2013; Irrigated surface area (as a percentage of irrigable lands) increases from 14% in 2011 to 17% in 2013; Development of 2500 ha in 2012 and 2500 ha in 2013; Support to increase yields on 500,000 ha of rain-fed farms during the 2013 crop season; Vaccination of 500,000 cattle before the end of March 2013; Strategic destocking of 30,000 cattle before the end of December 2013; Food supplements of 5,000,000 TLU before the end of March 2013; Dune fixation on 1,500 ha in 2012 and 2000 ha in 2013; Planting of Moringa Oleifera on 500 ha in 2012 and 1000 ha in 2013; Stocking of 25 ponds with fish in 2012 and 25 ponds in 2013; Opening of 2778 km of firebreaks in 2013; Cutting of 400 ha of invasive weeds in 2012 and 400 ha of invasive weeds in 2013.

Report of the small-scale irrigation strategy validation workshop; Communiqué of the Council of Ministers adopting the small-scale irrigation strategy; Activity reports of the 2012 and 2013 irrigation farming season.

Niger does not yet have a seed policy despite a mandatory requirement in that regard by an ECOWAS regulation.

Adoption of the seed policy at the Council of Ministers

Adoption at the Council of Ministers of an agricultural input supply action plan. Operationalization of the seed policy

The agricultural input supply action plan is implemented in 2013

Communiqué of the Council of Ministers adopting the seed policy; Communiqué of the Council of Ministers adopting an agricultural input supply action plan. Activity report of the 2003 rain-fed farming season

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Despite its potential, numerous constraints impede the development of the stockbreeding sub-sector in Niger including: (i) food constraints; (ii) health constraints; (iii) stock watering constraints; and (iv) land tenure security constraints. Given these constraints, it is important for the Ministry of Livestock to have a Livestock Sustainable Development Strategy (SDDE) and an action plan whose implementation will greatly help to improve food security, raise farmers' incomes and boost their resilience to crises and natural disasters.

Adoption, at the Council of Ministers, of the livestock development strategy (SDDE) and its action plan

Operationalization of the livestock sustainable development strategy

The livestock development strategy is implemented in 2013.

Communiqué of the Council of Ministers adopting the livestock sustainable development strategy and its action plan; Activity reports of the 2012 and 2013 lean season.

Land degradation in Niger is a key factor that contributes to low agricultural productivity, food insecurity and poverty. That is why, as soon as it joined the TerrAfrica process in 2007, Niger began to draft its Strategic Framework for Investment in Sustainable Land Management with a view to identifying the priority actions on which to target investments and designing a master plan for a more coherent coordination of resource allocation for the financing and promotion of sustainable land management (GDT) actions.

Adoption of the sustainable land management strategic framework (CGDT)

Operationalization of the sustainable land management strategic framework

The sustainable land management strategic framework is implemented in 2012 and 2013.

Communiqué of the Council of Ministers adopting the sustainable land management strategic framework (CGDT); Activity reports of the 2012 and 2013 crop season.

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Objectives / Strategic pillars

Baseline situation as of end-June 2012 Supported Measures and Actions Output indicators Outcome indicators Source of verification of the implementation of measures

2012 2013

B1. Reinforcement of Agro-pastoral Sector Governance

The population experiences recurrent water supply difficulties in terms of quantity and quality. On the other hand, they also face the problem of protection against floods, droughts and water-borne diseases. It is therefore imperative for Niger to have an appropriate technical instrument to aid decision-making, especially an integrated water information system that is supplemented by water quality testing laboratories.

Establishment of a System for Quality Monitoring and Information on Water Resources

The water resources quality monitoring and information system is established in 2013; One national laboratory and eight equipped regional laboratories are available.

Availability of reliable data on (i) resource status, (ii) uses, (iii) societal needs, (iv) environmental needs, (v) water-related risks; and (vi) water quality.

Acceptance report of the information system; Acceptance report of the national laboratory and the eight regional laboratories.

Niger’s environmental management regulations, enshrined in Law No. 98-56 of 29 December 1998 to lay down the framework legislation for environmental management provides for environmental management tools for projects. However, it is not consistent with strategies and programmes such as I3N. Environmental and social management tools therefore have to be developed.

Adoption of the I3N Environmental and Social Management Tools

The revised law on environmental impact assessments (EIAs) is adopted in 2003; The I3N Environmental Assessment and Social Safeguards (EESS) report is validated in 2013; The action plan for greater access to I3N resources for women and youth is adopted;

% of female microfinance beneficiaries surges from 0.7% in 2007 to 10% in 2013 Women’s labour force partcipation rate rises from 39% in 2009 to 50% in 2013

Communiqué of the Council of Ministers adopting the revised law on EITI; Validated report of the EESS on I3N; Communiqué of the Council of Ministers adopting the action plan for greater access to I3N resources for women and youth.

Niger has a gender policy. However, this policy does not clearly include climate change.

Update and adoption of the gender policy at the Council of Ministers, including the climate change dimension.

The gender policy including the climate change dimension is adopted in 2013.

Statement of the Council of Ministers adopting the new gender policy.

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Objectives / Strategic pillars

Baseline situation as of end-June 2012 Supported Measures and Actions Output indicators Outcome indicators Source of verification of the implementation of measures

2012 2013

B1. Reinforcement of Agro-pastoral Sector Governance

Climate change is a major threat to growth and sustainable development in Niger and to the achievement of the Millennium Development Goals. The country is particularly vulnerable to the effects of climate change, mainly because of its dependence on rain-fed farming yields. The I3N which replaces the SDR must include climate change in order to secure all investments that will be made under the initiative and to mitigate their impact on climate.

Adoption of tools for inclusion of climate change in I3N

A guide for including climate change in planning documents is adopted; An action plan for the inclusion of climate change (CC) in I3N is adopted; CC is integrated into 50 PDCs in 2013; A meteorological assistance strategy for the irrigation farming season is adopted.

Statement of Council of Ministers adopting the guide for integration of climate change into planning documents, the action plan for the inclusion of climate change in I3N, and the meteorological assistance strategy for the irrigation farming season; Validation reports of the 50 PDCs integrating CC.

The importance given to land tenure issues in Niger stems from reasons related to the Sahelian nature of the country, characterized by a fragile ecosystem and the increasingly unbearable scarcity of farmland. Furthermore, it stems from the magnitude of its population growth relative to the low productivity of its farming systems as well as its numerous and sometimes violent and fratricidal land conflicts. The institution of the rural code as the national policy framework for rural land tenure is definitely one way for the State to avoid or manage at best these recurrent conflicts. However, for greater efficiency, the current mechanism has to be broadened to the most decentralized level possible.

Extension of the land tenure security and management mechanism to communes.

Extension of the land tenure security and management mechanism to districts.

Additional texts are adopted before the end of March 2013 and the enabling decrees before December 2013; A manual on the establishment of COFOs in pastoral areas is adopted before the end of December 2013.

Establishment of 36 COFOCOMs before the end of March 2013 and 27 COFODEPs before the end of December 2013.

Publication of the enabling texts of the rural code; Statement of the Council of Ministers adopting the additional texts and the manual for establishment of COFOs in pastoral areas; Legal texts on the rural code re-published and disseminated; Establishment report of the 36 COFOCOMs and 27 COFODEPs.

I3N was adopted by the Government in April 2012. Implementation of the strategy will imply a diversity of actors whose functions are mutually complementary and useful for the attainment of results. This entails having an institutional mechanism comprising (i) governance, dialogue and multi-stakeholder consultation; (ii) an operationalization and financing mechanism and a mechanism for coordination, guidance, monitoring/evaluation of implementation.

Adoption of the texts creating the institutional mechanism for implementing the I3N strategy

Establishment of the Institutional Mechanism for I3N Strategy Implementation (Validation of report on the study on the establishment of the Food and Nutrition Security Investment Fund)

The institutional mechanism for implementing the I3N strategy is operational in 2013. The study on the establishment of the Food and Nutrition Security Investment Fund is validated.

Decree to set up the Institutional Mechanism for I3N Strategy Implementation; Validated report of the study for the establishment of Food and Nutrition Security Investment Fund.

ANNEX 3

Page 8/8

Objectives / Strategic pillars

Baseline situation as of end-June 2012 Supported Measures and Actions Output indicators Outcome indicators Source of verification of the implementation of measures 2012 2013

B.2 Improvement of the Business Environment and the Competitiveness of the Agrop-pastoral Sectors

According to the World Bank’s "Doing Business 2012" Report, Niger ranks 173rd out of 183 countries, as regards ease of doing business. Starting and closing a business, obtaining construction permits, getting credit, paying taxes, enforcing contracts, trading across borders and protecting investors have been identified as being particularly bureaucratic and costly processes. To improve on the business environment, the country has embarked on the preparation of a new investment code since 2008. Its finalisation was delayed by the political events that occurred. The new authorities are also waiting for the new WAEMU directives on the investment code. However, adoption of the new code by the Government is scheduled for 2012.

Adoption at the Council of Ministers of the draft investment code and its transmission to Parliament

Adoption of the investment code by the National Assembly

The new investment code goes into force in 2013

The time taken to start a business is reduced reduced from 17 business days in 2011 to 3 business days in 2013. Number of business start up procedures declines from 9 in 2011 to 4 in 2013 Number of documents required for export preparation drops from 8 in 2011 to 6 in 2013 Number of documents required for import preparation drops from 10 in 2011 to 8 in 2013 Number of animals on the hoof (cattle, sheep, goats, camels, horses, donkeys) exported to Nigeria increases by at least 50% between 2011 and 2013 Trade deficit as a percentage of GDP plummets from 15.6% in 2011 to 7.9% in 2013

Communiqué of the Council of Ministers adopting the investment code; Letter of transmission of the draft investment code to Parliament; Law defining the investment code. Action plan for import-export sector reform Action plan for improving “Doing Business” indicators.

Niger is a landlocked country. High transport costs, numerous procedures and lengthy police, customs and gendarmerie formalities constitute an impediment to the development of national and international trade. According to the World Bank’s "Doing Business 2012" Report, Niger ranks 173rd out of 183 countries, as regards cross-border trade. Exporting a standard container of goods requires 8 documents, takes 59 days and costs USD 3545. Importing the same standard container of goods requires 10 documents, takes 64 days and costs USD 3545.

Preparation of the action plan for reform of import-export sector procedures

Preparation of action plans for improving “Doing Business” indicators.

Action plan for improving “Doing Business” indicators is prepared

Niger does not have a coherent trade promotion policy and strategy. With respect to the policy and institutional measures provided for under the I3N initiative special mention is made of accelerating the design and implementation of the national policy on trade in agro-silvo-pastoral products. The Government has initiated the process of formulating the national trade promotion policy with the objective of including the promotion of agro-silvo-pastoral products as one of the priorities.

Technical validation of the national trade promotion policy

Adoption at the Council of Ministers of the national trade promotion policy.

A new national trade promotion policy is adopted.

Report of the validation workshop on the national trade promotion policy. Communiqué of the Council of Ministers adopting the national trade promotion policy.

The Business Centre is created by Decree of 30 May 2012 within Niger’s Chamber of Commerce, Industry and Handicrafts is not yet operational. The main operational structures planned are (i) the Business Formalities Centre (CFE) or one-stop-shop and the Investments Promotion Centre (CPI).

Establishment of operational structures

Make the Business Centre and its different entities (CFE and CPI) operational.

The Business centre is created and operational within Niger’s Chamber of Commerce, Industry and Handicrafts.

Decree to set up the Business Centre.

ANNEX 4 Page 1/2

STATEMENT ON RELATIONS BETWEEN THE IMF AND THE REPUBLIC OF NIGER

Statement of the IMF Staff Mission to Niger Press Release No. 12/90 of 16 March 2012 The IMF Executive Board Approves Three-Year US$ 120.97 million Extended Credit Facility Arrangement and US$ 17.28 million Disbursement for Niger The Executive Board of the International Monetary Fund (IMF) today approved a new arrangement for Niger under the Extended Credit Facility (ECF) in an amount equivalent to SDR 78.96 million (about US$120.97 million). The Board’s decision will enable an immediate disbursement equivalent to SDR 11.28 million (about US$17.28 million). The authorities’ program is aimed at maintaining macroeconomic stability while increasing resilience to shocks; strengthening public finance and debt management; putting in place a transparent legal and supervisory framework for the mining and petroleum sectors; and supporting private and financial sector development. Following the Board’s discussion of Niger, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair issued the following statement: “The authorities’ new ECF-supported economic program aims at addressing the development challenges ahead, maintaining macroeconomic stability, and increasing resilience to shocks. Policies under the program will focus on strengthening public finance and debt management, putting in place a transparent legal and supervisory framework for the natural resources sector, and supporting private and financial sector development. “The 2012 budget is well aligned with the authorities’ growth and poverty reduction program. Medium-term fiscal policy is rightly geared towards creating the fiscal space for increased development spending, while maintaining debt sustainability. Rising receipts from oil production and strengthened domestic revenue should primarily finance the planned investment. It will also be important to step up efforts to seek grants and concessional financing for large infrastructure investment and other projects. Non-concessional loans should only be contracted for well-assessed, high-yield projects. “A significant build-up of government reserves at the central bank will provide flexibility in budget execution and bolster Niger’s resilience to exogenous shocks. “Important structural reforms are underway. Measures to strengthen budget execution, reduce the number of tax exemptions, and modernize tax and customs administration will help maintain fiscal stability. At the same time, steps to strengthen and develop the financial system and improve the business climate will promote private sector development and diversify the economy,” Mr. Shinohara added. Recent Economic Developments Niger is emerging from a prolonged period of social unrest and from military rule. A democratically-elected government came into power in April 2011. Building on the poverty reduction strategy, the government has adopted an ambitious development program. Economic activity in recent years has been affected by large swings in agricultural production. Following a year of serious food shortages, economic growth recovered quickly in late 2010, driven by an excellent harvest and the expansion of services related to agriculture. The authorities’ medium-term policy framework is based on a favorable growth outlook driven mainly by the oil and mining sectors. With the startup of a new petroleum project, GDP is projected to expand by13.4 percent in real terms in 2012. Investments in a large new uranium mine and the development of the petroleum sector should sustain economic activity in the years after 2012. Niger’s medium-term prospects are nevertheless subject to various risks. The country is vulnerable to exogenous shocks, including recurrent, weather-related food crises and fluctuations in commodity prices. The deteriorating security situation in the region is another factor adding to Niger’s vulnerabilities.

ANNEX 4 Page 2/2

Program Objectives The authorities’ new three-year program builds on the government’s medium-term development strategy, and draws on the lessons of the Ex Post Assessment discussed by the Executive Board of the IMF on December 2, 2011. It is aimed at:

• Creating fiscal space for rising development spending while maintaining external debt sustainability;

• Rebuilding government deposits at the central bank to facilitate budget execution and enhance resilience to exogenous shocks;

• Strengthening public finance and debt management; • Establishing a sound, transparent supervisory and legal framework for the natural resource

sector; • Improving the business environment, including reforms aimed at sustaining the stability of the

financial sector and increasing access to financial services. Medium-term fiscal policy will aim at maintaining debt sustainability while creating room for increased development spending. At the same time, the objective is to strengthen government cash balances to increase the resilience of the budget to unexpected shocks. In light of these objectives and the current projections for external donor aid, the authorities intend to keep the basic fiscal deficit below 1.5 percent of GDP during the program period. The government is committed to further strengthening public oversight of the natural resources sector in 2012 through the Interministerial Committee for natural resources assessment, which will ensure appropriate information flows and coordination between government representatives in each natural resource company. In addition, the government intends to undertake a study on its overall strategy and policy in the petroleum and mining sector, including the policy to maximize the government’s petroleum resources and the structure of government oversight in that sector. This study is to be completed by end-December 2012. A key objective for the medium term will be to bring the Investment Code into line with best practices. In collaboration with the World Bank, the authorities are planning to undertake a comprehensive review of the Code in 2012. Source: http://www.imf.org/external/np/sec/pr/2012/pr1290.htm

ANNEX 5 Page 1/1

KEY MACROECONOMIC INDICATORS 2000 2006 2007 2008 2009 2010 2011

NE

Indicators Unit 2000 2006 2007 2008 2009 2010 2011 (e)

INDNational AccountsN GNI at Current Prices Million US $ 1 966 3 769 4 044 4 769 5 091 5 739 ...NY

GNI per Capita US$ 180 280 290 330 340 370 ...N GDP at Current Prices Million US $ 1 667 3 645 4 296 5 382 5 267 5 483 6 478N GDP at 2000 Constant prices Million US $ 1 667 2 284 2 362 2 581 2 562 2 767 2 883N Real GDP Growth Rate % -2,6 5,8 3,4 9,3 -0,7 8,0 4,2N Real per Capita GDP Growth Rate % -5,8 2,2 -0,1 5,5 -4,1 4,3 0,6NE

Gross Domestic Investment % GDP 13,9 23,6 23,1 31,7 31,8 33,7 33,7NE

Public Investment % GDP 4,3 6,7 6,3 6,7 7,8 4,8 4,8NE

Private Investment % GDP 9,6 16,8 16,8 25,0 24,0 28,9 28,9NY

Gross National Savings % GDP 5,7 15,0 14,6 19,3 7,9 23,5 11,8

Prices and MoneyFP

Inflation (CPI) % 2,9 0,4 0,4 11,3 4,3 0,9 3,4P Exchange Rate (Annual Average) local currency/US$ 712,0 522,9 479,3 447,8 472,2 495,3 471,9FM

Monetary Growth (M2) % 12,4 16,2 23,1 12,0 18,7 21,6 6,0FM

Money and Quasi Money as % of GDP % 8,8 15,2 17,3 16,5 19,0 21,2 19,9

Government FinanceGC

Total Revenue and Grants % GDP 14,3 59,3 20,8 25,1 19,1 19,0 18,4GC

Total Expenditure and Net Lending % GDP 18,1 19,0 21,7 23,7 24,6 21,5 23,3GC

Overall Deficit (-) / Surplus (+) % GDP -3,8 40,3 -0,9 1,4 -5,5 -2,5 -4,9

External SectorT Exports Volume Growth (Goods) % 27,4 3,2 4,3 6,3 13,6 0,0 9,6T Imports Volume Growth (Goods) % 6,7 -4,7 20,1 40,2 35,3 -10,5 20,5T Terms of T rade Growth % -17,7 1,0 23,0 22,5 -1,8 -7,6 8,2B Current Account Balance Million US $ -111 -314 -352 -701 -1 315 -1 148 -1 765B Current Account Balance % GDP -6,7 -8,6 -8,2 -13,0 -25,0 -20,9 -27,2F External Reserves months of imports 1,6 2,7 3,5 2,8 2,0 1,7 ...

Debt and Financial FlowsD Debt Service % exports 73,4 4,2 3,1 1,8 1,7 1,3 3,2D External Debt % GDP 89,1 15,8 15,9 14,0 15,7 16,2 17,6D Net Total Financial Flows Million US $ 183 -408 327 575 473 ... ...D Net Official Development Assistance Million US $ 209 544 544 612 469 745 ...D Net Foreign Direct Investment Million US $ 8 51 129 566 739 947 ...

Source : AfDB Statistics Department; IMF: World Economic Outlook, April 2012 and International Financial Statistics, April 2012; AfDB Statistics Department: Development Data Portal Database, May 2012. United Nations: OECD, Reporting System Division.Notes: … Data Not Available ( e ) Estimations Last Update: May 2012

NigerSelected Macroeconomic Indicators

-4,0

-2,0

0,0

2,0

4,0

6,0

8,0

10,0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

%

Real GDP Growth Rate, 2000-2011

-4

-2

0

2

4

68

10

12

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Inflation (CPI), 2000-2011

-30,0

-25,0

-20,0

-15,0

-10,0

-5,0

0,0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Current Account Balance as % of GDP,2000-2011

ANNEX 6 Page 1/1

COMPARATIVE SOCIO-ECONOMIC INDICATORS

Year Niger AfricaDevelo-

ping Countries

Develo- ped

CountriesBasic IndicatorsArea ( '000 Km²) 2011 1 267 30 323 80 976 54 658Total Population (millions) 2011 16,1 1 044,3 5 733,7 1 240,4Urban Population (% of Total) 2011 17,2 40,4 45,5 75,4Population Density (per Km²) 2011 12,7 36,1 59,9 36,5GNI per Capita (US $) 2010 370 1 549 3 304 38 657Labor Force Participation - Total (%) 2011 37,6 74,7 65,0 60,4Labor Force Participation - Female (%) 2011 31,1 42,5 49,2 50,2Gender -Related Dev elopment Index Value 2007 0,308 0,502 0,694 0,911Human Dev elop. Index (Rank among 187 countries 2011 186 ... ... ...Popul. Liv ing Below $ 1.25 a Day (% of Population 2008 43,6 40,0 22,4 ...

Demographic IndicatorsPopulation Grow th Rate - Total (%) 2011 3,5 2,3 1,3 0,4Population Grow th Rate - Urban (%) 2011 4,3 3,4 2,3 0,7Population < 15 y ears (%) 2011 49,0 40,4 28,7 16,5Population >= 65 y ears (%) 2011 2,2 3,4 5,9 16,2Dependency Ratio (%) 2011 104,9 78,1 53,0 48,6Sex Ratio (per 100 female) 2011 101,3 99,5 103,4 94,6Female Population 15-49 y ears (% of total populatio 2011 21,6 24,4 26,2 23,6Life Ex pectancy at Birth - Total (y ears) 2011 54,7 57,7 77,7 67,0Life Ex pectancy at Birth - Female (y ears) 2011 55,2 58,9 68,9 81,1Crude Birth Rate (per 1,000) 2011 48,2 34,5 21,1 11,4Crude Death Rate (per 1,000) 2011 12,6 11,1 7,8 10,1Infant Mortality Rate (per 1,000) 2011 88,3 76,0 44,7 5,4Child Mortality Rate (per 1,000) 2011 148,7 119,5 67,8 7,8Total Fertility Rate (per w oman) 2011 7,0 4,4 2,6 1,7Maternal Mortality Rate (per 100,000) 2010 590,0 530,7 230,0 13,7Women Using Contraception (%) 2010 18,0 28,6 61,2 72,4

Health & Nutrition IndicatorsPhy sicians (per 100,000 people) 2008 1,9 57,8 112,0 276,2Nurses (per 100,000 people)* 2008 13,7 134,7 186,8 708,2Births attended by Trained Health Personnel (%) 2007-09 17,7 53,7 65,3 ...Access to Safe Water (% of Population) 2010 49,0 65,7 86,3 99,5Access to Health Serv ices (% of Population) 2007-09 ... 65,2 80,0 100,0Access to Sanitation (% of Population) 2010 9,0 39,8 56,1 99,9Percent. of Adults (aged 15-49) Liv ing w ith HIV/AID 2009 0,8 4,3 0,9 0,3Incidence of Tuberculosis (per 100,000) 2010 185,0 241,9 150,0 14,0Child Immunization Against Tuberculosis (%) 2010 83,0 85,5 95,4 ...Child Immunization Against Measles (%) 2010 71,0 78,5 84,3 93,4Underw eight Children (% of children under 5 y ears 2007-09 39,9 30,9 17,9 ...Daily Calorie Supply per Capita 2007 2 376 2 462 2 675 3 285Public Ex penditure on Health (as % of GDP) 2009 3,5 2,4 2,9 7,4

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2011 70,8 101,4 107,8 101,4 Primary School - Female 2011 64,3 97,6 105,6 101,3 Secondary School - Total 2010 13,4 47,5 64,0 100,2 Secondary School - Female 2010 10,6 44,3 62,6 99,8Primary School Female Teaching Staff (% of Total) 2010 44,7 44,3 60,7 81,7Adult literacy Rate - Total (%) 2007-09 28,7 67,0 80,3 98,4Adult literacy Rate - Male (%) 2007-09 42,9 75,8 86,0 98,7Adult literacy Rate - Female (%) 2007-09 15,1 58,3 74,9 98,1Percentage of GDP Spent on Education 2010 3,8 4,6 4,1 5,1

Environmental IndicatorsLand Use (Arable Land as % of Total Land Area) 2009 11,8 7,6 10,7 10,8Annual Rate of Deforestation (%) 2007-09 3,7 0,6 0,4 -0,2Forest (as % of Total Land Area) 2010 1,0 23,0 28,7 40,4Per Capita CO2 Emissions (metric tons) 2009 0,1 1,1 2,9 12,5

Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update :UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports.

Note : n.a. : Not Applicable ; … : Data Not Available.

COMPARATIVE SOCIO-ECONOMIC INDICATORSNiger

June 2012

020406080

100120

2003

2004

2005

2006

2007

2008

2009

2010

2011

Infant Mortality Rate( Per 1000 )

Niger Africa

0200400600800

10001200140016001800

2002

2003

2004

2005

2006

2007

2008

2009

2010

GNI Per Capita US $

Niger Africa

0,00,51,01,52,02,53,03,54,0

2003

2004

2005

2006

2007

2008

2009

2010

2011

Population Growth Rate (%)

Niger Africa

111213141516171

2003

2004

2005

2006

2007

2008

2009

2010

2011

Life Expectancy at Birth (years)

Niger Africa