Document of The World Bank

FOR OFFICIAL USE ONLY

Report No. 69131-NE

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROGRAM DOCUMENT

FOR A PROPOSED CREDIT

IN THE AMOUNT OF SDR 32.3 MILLION

(US$50 MILLION EQUIVALENT)

TO THE REPUBLIC OF NIGER

FOR A

FIRST SHARED GROWTH CREDIT

May 31, 2012

Poverty Reduction and Economic Management 3 Country Management Unit AFCW3 Africa Region

This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s Policy on Access to Information.

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Republic of Niger

Government Fiscal Year January 1 – December 31

Currency Equivalents

(Exchange Rate Effective as of 30 April 2012) Currency Unit FCFA

US$1.00 FCFA 496.41 US$1.00 SDR 0.64493

Weights and Measures Metric System

Abbreviations and Acronyms

AAA Analytic and Advisory Activities AAP Africa Action Plan AFD French Development Agency AfDB African Development Bank AIPU Agricultural Inputs Procurement Unit ANIPEX Agency for Export Promotion ARMP Public Procurement Regulation Agency BCEAO Central Bank of the West African States CA Contracting Authority CAFER Road Fund CARGS Competitive Agricultural Research Grant Scheme CAS Country Assistance Strategy CCA Food Crisis Unit CEM Country Economic Memorandum CFAA Country Financial Accountability Assessment CIP Inter-ministerial Steering Committee for Rural Development CNE National Savings Bank CNIP National Private Investors Council CNPC China National Petroleum Company CNRA National Agricultural Research Council CNSS National Social Security Fund COA Bid Review Commission COMINAK Akouta Mining Company CPAR Country Procurement Assessment Report CPI Consumer Price Index DGB General Directorate of Budget DGCMP General Directorate of Public Procurement DGI General Directorate of Taxes DGPP Government Declaration of Population Policy DHS Demographic and Health Survey

DPM Public Procurement Units DPO Development Policy Operation DSA Debt Sustainability Analysis ECF Enhanced Credit Facility ECOWAS Economic Community of West African States EITI Extractive Industries Transparency Initiative EU European Union FAO Food and Agriculture Organization of the United Nations FDI Foreign Direct Investment FIAS Foreign Investment Advisory Services FINAPOSTE Postal Bank of Niger FNR National Retirement Fund FPD Finance and Private Sector Development GDP Gross Domestic Product GPRC Growth Policy Reform Credit GPRG Growth Policy Reform Grant GPRO Growth Policy Reform Operation GoN Government of Niger HALC High Authority to Fight Corruption HIPC Heavily Indebted Poor Countries Initiative HIV/AIDS Human Immunodeficiency Virus/ Acquired Immunodeficiency

Syndrome IAS International Accounting Standards ICA Investment Climate Assessment IDA International Development Association IDF Institutional Development Fund ISB Corporate Income Tax IFC International Finance Corporation IFRS International Financial Reporting Standards IMF International Monetary Fund INS National Institute of Statistics IPP Independent Power Producer MCC Millennium Challenge Corporation MDGs Millennium Development Goals MDRI Multilateral Debt Relief Initiative M&E Monitoring and Evaluation MEF Ministry of Economy and Finance MTEF Medium-Term Expenditure Framework NIGELEC Niger’s Power Company NGO Non-Governmental Organization NPV Net Present Value OECD DAC Organization for Economic Co-operation and Development OHADA Organization for Harmonization of Business Law

ONAHA Niger’s Agency for Irrigation Schemes ONPE National Post and Savings Office OPVN Niger’s Cereal Reserve Agency PCU Project Coordination Unit PEFA Public Expenditure and Financial Accountability PEM Public Expenditure Management PEMFAR Public Expenditure Management and Financial Accountability Review PER Public Expenditure Review PETS Public Expenditure Tracking Survey PPP Private Public Partnerships PRGF Poverty Reduction and Growth Facility PRMP Regional Program for Procurement Reform PRODEM Multi-sector Demographic Program PRSC Poverty Reduction Support Credit PRSP Poverty Reduction Strategy Paper RDS Rural Development Strategy RSRC Rural and Social Policy Reform Credit SDRs Special Drawing Rights SMEs Small and Medium Enterprises SML Liptako Mining Company SNDI National Strategy for Irrigation Development SOE State-Owned Enterprise SOMAIR Aïr Mining Company SONITEL Niger’s state-run telecom company SSA Sub-Saharan Africa SWAP Sector-Wide Approach TFP Total Factor Productivity TFR Total Fertility Rate UNDP United Nations Development Program UNFPA United Nations Population Fund VAT Value Added Tax WAAPP West African Agricultural Productivity Project WAEMU West African Economic and Monetary Union WFP World Food Program WHO World Health Organization

Vice President Country Director

Sector Director Acting Sector Manager

Task Team Leader

: : : : :

Makhtar Diop Ousmane Diagana Marcelo Giugale Eric Bell Robert Johann Utz

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REPUBLIC OF NIGER

SHARED GROWTH CREDIT 1

TABLE OF CONTENTS

I.  INTRODUCTION ....................................................................................................................... 1 

II.  COUNTRY CONTEXT .............................................................................................................. 1 

A.  Recent Political Developments in Niger ................................................................................. 2 B.  Recent Economic Developments in Niger .............................................................................. 4 C.  Macroeconomic Outlook And Debt Sustainability ................................................................. 8 D.  Poverty and MDGs................................................................................................................ 10 E.  Niger’s Growth Challenge .................................................................................................... 13 

III.  THE GOVERNMENT’S PROGRAM AND PARTICIPATORY PROCESSES ............... 16 

IV.  BANK SUPPORT TO THE GOVERNMENT’S PROGRAM .............................................. 17 

A.  Link to CAS and the Africa Region Strategy ........................................................................ 17 B.  Results Achieved Under GPRG-1 and GPRC-2 ................................................................... 18 C.  Collaboration with the IMF and Other Donors ..................................................................... 20 D.  Lessons Learned .................................................................................................................... 21 E.  Analytical Underpinnings ..................................................................................................... 22 F.  Relationship to Other Bank Operations ................................................................................ 24 

V.  THE PROPOSED SGC-1 ......................................................................................................... 25 

A.  Operation Description ........................................................................................................... 25 B.  Policy Areas and Cross Cutting Issues.................................................................................. 27 C.  SGC-1 Prior Actions and SGC-2 Triggers ............................................................................ 43 

VI.  OPERATION IMPLEMENTATION ...................................................................................... 45 

A.  Poverty And Social Impacts .................................................................................................. 45 B.  Environmental Aspects ......................................................................................................... 46 C.  Implementation, Monitoring And Evaluation ....................................................................... 47 D.  Fiduciary Aspects .................................................................................................................. 48 E.  Disbursement And Auditing ................................................................................................. 49 F.  Risks And Risk Mitigation .................................................................................................... 49 

LIST OF BOXES

Box 1: Key Elements of the Government Program .............................................................................. 17 Box 2: Overview of Policy Areas and Reforms Targeted by the SGC Series ...................................... 26 Box 3: Good Practice Principles for Conditionality ............................................................................. 47 

LIST OF FIGURES

Figure 1: Governance Indicators, 2000-2010 ......................................................................................... 3 Figure 2: Trends in the Human Development Index for Niger, Mali, Mozambique and the Average for Sub-Saharan Africa, 1980-2011 ............................................................................................................ 11 

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Figure 3: Per-capita Incomes and Economic Growth, 1960-2010 ....................................................... 14 Figure 4: Factors with Largest Negative Impact on Initial Investment Decisions ............................... 27 Figure 5: How Far Has Niger Come in Areas Measured by Doing Business? Distance to Frontier, 2005 and 2011 ....................................................................................................................................... 28 

LIST OF TABLES

Table 1: Key Macroeconomic Indicators ............................................................................................... 5 Table 2: Central Government Operations, 2007-2012 ........................................................................... 7 Table 3: Analytic Work Informing the Reform Program Supported by the SGC Series ..................... 23 Table 4: Current Portfolio of Bank Supported Projects in Niger ......................................................... 24 Table 5: Major or Very Severe Constraints to Firms’ Growth ............................................................. 28 Table 6: SGC-1 Prior Actions .............................................................................................................. 43 Table 7: Preliminarily Identified Triggers for SGC-2 .......................................................................... 44 

LIST OF ANNEXES

Annex 1: Letter of Development Policy ............................................................................................... 53 Annex 2: Policy Matrix ........................................................................................................................ 77 Annex 3: Monitoring Indicators and Development Outcomes ............................................................. 81 Annex 4: Joint Policy Matrix ............................................................................................................... 83 Annex 5: Fund Relations Note ............................................................................................................. 88 Annex 6: Country At A Glance ............................................................................................................ 89 Annex 7: Map ....................................................................................................................................... 93 

 

 

 

The Credit was prepared by an IDA team consisting of Robert Utz (Task Team Leader), Abdoulahi Garba, Janet Owens, Maude Valembrun (AFTP3), Robert Yungu (AFTPR), El Hadj Adama Toure, Amadou Alassane (AFTAR), Ibrah Sanoussi (AFTPC), Beth Mwangi, Jean Gaspard Ayi (AFTFM), Africa Olojoba (AFTEN), Djibrilla Issa (AFTFW), Amal Talbi (AFTWR), Issa Diaw (AFTEG), Aguiratou Savadogo-Tinto (AFTTR), Helen Bertaud (LEGAF), Wolfgang Chadab (CTRFC), and Karima Ladjo (AFMNE). Peer reviewers are

Praveen Kumar (AFTP1) and Volker Treichel (DECOS).

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REPUBLIC OF NIGER FIRST SHARED GROWTH CREDIT

CREDIT AND PROGRAM SUMMARY

Recipient Republic of Niger

Implementing Agency Ministry of Planning, Regional and Community Development

Financing Data IDA Credit of SDR 32.3 million (US$50 million equivalent)

Operation Type The First Shared Growth Credit (SGC-1) is the first in a series of three planned Development Policy Operations, to be available in one tranche upon effectiveness of the financing agreement.

Main Policy Areas

The proposed SGC-1 focuses on reforms to foster shared economic growth and to enhance the efficacy of public spending in Niger. Specifically, the credit supports reforms in three government priority policy areas:

Improving the business environment; Agriculture and rural development; and Enhancing the efficacy of public spending.

Key Outcome Indicators

Specific outcome indicators as a result of specific policy reforms supported by the series of three operations include:

Reduced time for administrative procedures related to exports and imports;

Increase in public-private partnerships and flow of new investments; A financially sustainable power sector; Increase in agricultural productivity for male and female farmers; Increase in the number of new agricultural technologies developed

and adopted by male and female farmers; Increased in budget execution rate for pro-poor expenditures; Increased use of competitive bidding processes.

Program Development Objective (s) and Contribution to CAS

The overall development objective is to support reforms that would help improve the business environment for investment and trade, increase agricultural productivity, and strengthen public financial management. This in turn is expected to help achieve government and CAS objectives related to an increase in per capita incomes, increased resilience to external shocks, and increased access to social services and income earning opportunities for the poor in Niger.

Risks and Risk Mitigation

The main risks and mitigation measures associated with SGC-1 are as follows:

Security risks. Conflict in Libya, Mali, and Nigeria creates additional risks of escalating conflict in an environment fraught with tensions over resource rents, terrorist activities, and expanding criminal activities such as drug trafficking and smuggling across the Sahara. Government seeks to contain these risks through close security cooperation with regional and international partners, increased

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spending on security, and the design and implementation of a plan for development and security in the Sahelo-Saharan zone of the country.

External shocks. Niger’s economy remains highly vulnerable to weather related shocks to agriculture and livestock and to changes in global demand for its exports of uranium. Following the Fukushima nuclear accident, global demand and prices of uranium are on the decline. A deepening of the European debt crisis could also affect Niger’s development outlook through reduced development assistance, foreign direct investment, demand for Niger’s commodity exports and increased exchange rate risks. The expanding extractive industries sector exposes Niger further to fluctuations in commodity markets the risk of Dutch disease which needs to be carefully managed. In the short term, these risks are managed by preserving sufficient fiscal flexibility for expenditure adjustments. In the medium to long term, these risks require the diversification of the economy to reduce the vulnerability to such shocks.

Fiscal risks. The implementation of the ambitious government program requires significant domestic and external resource mobilization efforts and could create pressures for access to unsustainable sources of financing, especially if resource mobilization efforts do not achieve the targeted results. Agreement on a new IMF program and intensified budget dialogue by the Bank and other budget support donors are the key means to mitigate this risk. In addition, the Bank will support the authorities in their resource mobilization efforts.

Weak governance and capacities. These weaknesses may slow down implementation of the reform agenda and could undermine the achievement of results. To manage these risks, capacity building measures are an integral part of the Bank’s portfolio in Niger. A dedicated capacity building program for the Ministries of Finance and Planning became effective in 2010. The Bank also supports Government in the design and implementation of fiduciary reforms and provides technical assistance for the development of a governance and anti-corruption strategy to enhance public resource management and service delivery.

Coordination risks. The split of the former Ministry of Finance and Economy into a Ministry of Finance and a Ministry of Planning, Regional and Community Development requires strong coordination among the two ministries for the successful implementation of a harmonized budget support program. To mitigate this risk, a joint coordination mechanism is being established.

Operation ID P125272

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IDA PROGRAM DOCUMENT FOR A PROPOSED

FIRST SHARED GROWTH CREDIT TO THE REPUBLIC OF NIGER

I. INTRODUCTION

1. The proposed First Shared Growth Credit (SGC-1) for SDR 32.3 million (US$50 million equivalent) for Niger is the first in a series of three planned programmatic development policy operations. The credit would be disbursed in one tranche and provide Niger with financing for its 2012 budget and contribute to the funding of poverty reduction strategy (PRS)1 related expenditures.

2. The proposed SGC series will support reforms to foster shared growth, with a focus on improvements in the businesses environment and agriculture and rural development. The credit will also support reforms to achieve greater efficacy of public expenditures, including through closer alignment of public expenditures with the PRS and strengthening of public financial management and procurement systems. A more diversified economy and a strengthened agriculture sector are critical to enhancing Niger’s resilience to severe external shocks. The policy reforms supported by this operation contribute to the two pillars of the Africa Region Strategy – competitiveness and employment and vulnerability and resilience as well as to the foundation of the Africa Region’s strategy – governance and public sector capacity.

3. The new SGC series broadly retains the focus of the preceding series of two Growth Policy Reform Operations, the last of which was approved by the Board on June 23, 2011 and fully disbursed in October 2011. However, it also contains a number of important innovations. First, the new series of development policy operations (DPOs) supports and is fully aligned with the program of the new Government which took office in April 2011. Second, while the focus on economic growth is maintained, there is now a greater emphasis on reducing volatility of economic growth and enhancing resilience to economic shocks, as well as on fostering inclusive growth. Third, the reform program supported by the proposed DPO series is aligned with and complementary to a series of International Development Association (IDA) supported investment projects under implementation or preparation that also focus on fostering shared growth. Fourth, the proposed series is part of a harmonized budget support program supported by several donors, with a shared policy matrix. Fifth, the DPO series will be accompanied by an annual public expenditure review (PER) process that would support an intensified dialogue on public expenditure policies and public financial management reforms.

II. COUNTRY CONTEXT

4. Niger is a large, landlocked, mostly desert country with an area of 1.27 million square kilometers and a population of about 16 million. The country’s population is concentrated in the areas around the Niger River in the western corner of the country bordered by Mali, Burkina Faso and Benin, and then stretches through the Sahel region all along Nigeria’s long northern border. North of this belt, the land is largely desert. Niger’s population is growing by 3.3 percent annually with 47 percent under the age of 15. 1 Niger current PRS is the “Strategy for Accelerated Development and Poverty Reduction” covering the period 2008 to 2012. A successor PRSP is currently being prepared with the title “Plan for Economic and Social Development.”

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5. Niger is a poor country with a limited natural and human resource base. About two third of the population live below the national poverty line and a similar share of the adult population is illiterate. About 80 percent of the population derives their livelihoods from agriculture and livestock, even though the country constantly battles drought and only about 12 percent of all its land is arable. Uranium mining plays an important role in the Nigerien economy and contributes about 50 percent of the country’s exports. Much of economic activity takes place in the informal sector. Productivity in most sectors is low and exports consist mainly of unprocessed products from the extractive industries, livestock, and agriculture. Most of the country’s growth potential is associated with the oil and mining sector, livestock, and with regional trade in the West African Economic and Monetary Union (WAEMU) and with Nigeria.

6. Niger ranks 186th out of 187 countries on UNDP’s Human Development Index, with a Gross Domestic Product (GDP) per capita in Parity Purchasing Power (PPP) terms of US$720 in 2010, one of the lowest in the world. Nevertheless, since 2000, the country has witnessed improvements in both economic and social indicators. Despite periodic setbacks due to droughts, conflict in the sub-region, and political instability, growth has slowly been gathering momentum. Average per capita GDP growth has been positive since 2000, marking an encouraging shift from falling per capita GDP during the 1990s.

7. At present, Niger has an unprecedented opportunity to make significant advances in development and poverty reduction, but also faces high risks from a deteriorating international environment and conflict in neighboring countries. The successful return to constitutional order in April 2011 provides the basis for a renewed focus on economic development and poverty reduction. The government program sets out an ambitious agenda to foster economic growth, food security, universal primary education, and good governance. At the same time, the start of oil production in November 2011 and large scale investments in the uranium sector promise to boost economic growth in the medium term and provide additional resources to Government for the realization of its program. However, Niger being one of the world’s poorest countries, seizing the current opportunities will require continued official development assistance, together with government efforts to mobilize greater private sector participation in infrastructure and other areas. At the same time, Niger faces a number of risks. These include political fragility where failure of the Government to deliver tangible results could result quickly in the loss of popular support and a political stalemate; increased security threats from conflict and terrorist activities in the sub-region; and continued vulnerability to climatic shocks and developments in commodity markets. The proposed series of operations can thus play an important role in tilting the balance from risks to opportunity.

A. RECENT POLITICAL DEVELOPMENTS IN NIGER

8. Return to political stability. After ten years of relative political stability under the presidency of Mamadou Tandja, his efforts to change the constitution to allow him to run for a third term led to a deep political crisis that culminated in a coup d’état in February 2010. Subsequently, Niger was governed for 13 months by the Supreme Council for the Restoration of Democracy led by Army General Djibo Salou. The transition Government prepared a new constitution which was endorsed by referendum. A series of local, legislative, and presidential elections that were generally considered to have been fair paved the way for a return to democracy. Mahamadou Issoufou of the Nigerien socialist party was elected President and a new Government was formed in April 2011.

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9. The March 2012 coup d’état in Mali and the resulting complex political situation in Mali and especially the conflict and the proclamation of independence of the northern areas of Mali in April 2012 in the wake of the Tuareg rebellion create new risks for Niger. Niger suffered in the past from recurrent Tuareg insurgencies. The last insurgency ended with a negotiated ceasefire and amnesty in 2009. Since the outbreak of the crisis in Libya, a large number of seasonal and permanent migrants have returned to Niger with estimates ranging between 115,000 to 247,000 returnees2. UN reports suggests that already about 30.000 people have fled from Mali to Niger adding to the large number of repatriates from Libya and refugees from Nigeria. While it cannot be excluded that the Malian Tuareg rebellion could reignite Tuareg rebellions in Niger, following the 2009 ceasefire agreement, the Nigerien Government has taken measures to address the concerns of the Tuareg population which reduce the risk of repeated insurgencies. This includes greater political participation and inclusion of Tuaregs in the army and administration of the northern areas of the country, an agreement to have a share of mining revenues return to the mining areas in the north of the country, the appointment of a Tuareg as Nigerien Prime Minister, and greater military and administrative presence of the Nigerien Government in the north of the country.

10. Conflict in neighboring countries adds to of existing security threats from terrorist activities and an expanding drug trade and smuggling through the Sahara. With these developments, the situation in Niger’s north, which is home to Niger’s uranium industry, becomes more uncertain and potentially unstable. The Nigerien authorities have scaled up spending on security and are cooperating with regional and international partners to contain these severe security risks. In October 2011, Government adopted a strategy for development and security in the Sahelo-Saharan zones of Niger which combines security measures with a development approach to contain conflict and insecurity.

Figure 1: Governance Indicators, 2000-2010

11. The World Bank’s governance indicators for Niger show improvements on four of the six indicators over the period 2000 to 2010, while “voice and accountability” and

2 Estimates of the number of returning migrant workers differ widely. Based on border records, the number of returnees was 115,512 as of August 19, 2011. Estimates from the Early Warning System drawing on information from communities suggest the presence of 246,866 returned migrant workers.

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“political stability” weakened with the events that came about at the end of the Tandja government. The new Government is pursuing an ambitious program to strengthen accountability institutions and to fight corruption. Under the leadership of the Minister of Justice, a former civil society human rights advocate, progress includes assets declarations of all government members, the creation of an Anti-Corruption body (Haute Autorité de Lutte contre la Corruption et les Infractions Assimilés), and the set-up of a hotline in the Ministry of Justice to report corruption cases. Audits and judiciary investigations have led in the indictment of several of senior directors, particularly in the Ministry of Finance. An action plan to strengthen public financial management was also adopted in 2011. According to the 2011/2012 Press Freedom Index published by Reporters without borders, Niger is ranked 29th out of 179 countries and 4th among African countries. Niger achieved the biggest rise in a single year, 75 places, thanks to the successful political transition and government initiatives to enhance the freedom of press.

12. The Government of Niger has also recorded significant improvements in the transparent management and disclosure to the public of revenues generated from mining activities. Compliance with the Extractive Industries Transparency Initiative (EITI) included the disclosure of information on proceeds for the state from traditional uranium activities in the country. Niger's compliance with EITI standards and principles was found highly satisfactory by the EITI validation process, and the country was the first French speaking African country to complete EITI validation on March 1, 2011, a reputable status in natural resources management. During the post-compliant phase, Niger will seek to increase accountability by all stake-holders as well as greater involvement of civil society by further opening up the debate on extractive industries with the large public, and generally seek to build on EITI. The authorities are committed to include revenue from the oil sector in the EITI reporting starting in 2012. While the EITI concerns itself primarily with the transparency of revenues, it is important to note the need for transparency in all dealings, including the terms of upstream exploration and production, and arrangements for investments in pipelines and refining. Government has launched the process to carry out an audit of the entire oil value chain.

B. RECENT ECONOMIC DEVELOPMENTS IN NIGER

13. Macro-economic developments between 2009 and 2011 were dominated by the severe food and political crisis. Inadequate rains in 2009 and 2011 resulted in a poor harvests and low GDP growth of -0.9 and 2.1 percent respectively. A record harvest in 2010 supported a recovery of GDP growth to 8.0 percent in 2010. The political turmoil experienced in 2009 and 2010 caused a severe drop in development assistance and matching adjustments in government spending but did not result in severe disruptions of economic activity.

14. In 2011 and 2012, Niger is suffering from the spillovers from the civil war in Libya and Mali that coincide with another poor harvest due to late and insufficient rains. The return of a large number of migrant workers from Libya, with estimates ranging from 115,000 to 247,000 repatriates, is straining basic social service delivery (health, education, food) and employment. Libyan investment in Niger has also come to a stand-still. Recent conflict in neighboring Mali and Nigeria has triggered refugee flows and the return of migrant workers from these countries, further aggravating the situation and also adding to the security challenges faced by Niger. Increased levels of insecurity could have a severe impact on Niger’s economy through reduced mining sector production and exports, reduced investments, and continued stagnation of the tourism industry.

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Table 1: Key Macroeconomic Indicators

2009 2010 2011p 2012p 2013p 2014p 2015pReal GDP growth -0.9 8.0 2.1 13.4 6.5 7.2 6.9Inflation (annual %) 1.1 0.9 2.9 4.5 2.0 2.0 2.0Broad money growth (annual %) 18.3 22.6 6.6 18.5 8.5 11.9 14.1 Fiscal bal. (% of GDP, incl grants) -5.5 -2.6 -3.7 -4.3 -4.6 -5.1 -4.8Basic balance (% of GDP) 1/ -4.1 -3.0 -4.2 -2.1 -1.4 -1.5 -1.1 Curr acc bal (% of GDP, excl off trans) -25.7 -27.1 -32.4 -30.0 -23.9 -16.7 -15.5Curr acc bal (% of GDP, incl off trans) -25.0 -21.1 -28.3 -26.5 -20.6 -13.5 -12.5FDI (% of GDP) 13.9 18.5 16.8 15.1 8.4 1.2 1.2Foreign Aid 6.1 6.2 12.6 13.2 13.2 13.1 12.9Net foreign assets (months import) 2.2 1.8 2.1 3.0 4.1 5.0 5.5External debt (% of GDP) 19.2 17.4 25.8 27.1 29.5 31.8 34.1Domestic debt (% of GDP) 8.1 7.1 6.3 5.2 4.4 3.5 2.6PV of debt-to-exports ratio 97.8 112.0 89.9 86.6 83.0 78.4Source: IMF and staff estimates. 1/ Domestic revenue minus expenditures net of foreign financed projects Note: p –projection 15. The 2011/12 harvest left Niger with a cereal deficit of an estimated 692,502 tons compared to average deficits of about 400 – 500 thousand tons in previous years. A vulnerability survey carried out in December 2011 shows a significantly higher level of households at moderate and high levels of food insecurity compared to the situation a year ago. The share of households that are food secure drops from 56.1 percent in January 2011 to 42 percent in December 2011. About 5.4 million people are identified as being food-insecure, of which 1.3 million are highly food insecure. Niger’s Early Warning System3 indicates that by the end of March 2012, about 964,000 persons are in a critical food situation, another 834,000 in a difficult food situation, and 800,000 persons in a precarious food situation. The Famine Early Warning Systems Network (FEWS NET) estimates a per capita food deficit of 16 kgs of cereals for 2012, that taking into account the harvest shortfall in 2011, the relatively good performance of garden cultures, and available cereal stocks at the household level. This compares to an average surplus of 29 kgs per person over the past five years. However, FEWS NET also notes that markets are functioning well and that food imports from Nigeria result in a good provision of markets. Conflict in Mali and Niger has disrupted transhumance movements, with herds returning earlier as anticipated to Niger or not leaving as usual. This contributes to a further tightening of the animal fodder situation, which already showed a deficit of an estimated 10,000 tons due to the drought conditions in 2011.

16. To deal with these crises, Government is implementing an emergency food security program, a program for vulnerable groups, and a program for security and development in the Sahelo-Saharan zone. Government funding for these programs is to be complemented by donor and humanitarian assistance. A common appeal for assistance was issued by the UN system in January 2012 to fund programs for food security, nutrition, health, water, sanitation, hygiene, protection, and early recovery in a total amount of US$229 million. By early April 2012, pledges covering 45 percent of the required funding were received. IDA

3 Government of Niger and European Commission. 2012. Bulletin Flash – Synthèse de la situation alimentaire dans les zones vulnerables au 31 mars 2012. Bulletin Flash CC/SAP/CAB/PM No. 37. April 15, 2012

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approved supplemental financing to GPRC-2 in the amount of US$15 million on February 23, 2012 to help cover the unanticipated financing gap created by the crisis.

17. The Government’s emergency food security program has resulted in a significant increase in counter season vegetable production during the early months of 2012. The program has contributed to an increase by 40 percent of irrigated areas and a significant increase by 30 – 50 percent in the use of agricultural inputs for counter season production (seeds, fertilizer, and small agricultural implements). The increase in the counter season production has contributed to a significant drop in prices of potatoes, onion, tomatoes, and cabbage between March 2011 and March 2012. The program for vulnerable groups supports, inter alia, cash and food for work programs and the distribution of subsidized and free food to vulnerable population, with a particular focus on women and children. Blanket feeding operations for children between 6-23 months and nursing mothers are also underway with the support of WFP and various donors.

18. Despite the economic and political turbulence experienced between 2009 and 2011, Niger was able to maintain sound fiscal policies. The increase in the fiscal deficit (incl. grants) to 5.5 percent of GDP in 2009 was due to a temporary increase in capital expenditures financed with resources from a signing bonus received in the previous year. In 2010, the fiscal deficit declined to 2.6 percent, reflecting inter alia a drying up of external concessional credit due to the political crisis. The full resumption of donor assistance in 2011 allowed a sustainable increase in the fiscal deficit to 3.7 percent of GDP in 2011, which is projected to remain at that level in 2012. Dealing with the economic, social, humanitarian, and security impacts of the crises required budgetary reallocations in 2011 in the form of two supplementary budgets.

19. The 2012 budget contains increases in domestic and external resources and matching expenditure increases. The new Government is keen to deliver on its program through an ambitious budget for 2012. Domestic revenue is projected to increase by about 2.3 percent of GDP reflecting additional revenue from the mining and petrol sectors as well as administrative and policy measures to broaden the tax base and to reduce leakages. On the expenditure side key priorities include the Government’s program for universal education until the age of 16 and the program for agricultural development that seeks to break the link between droughts and famine. The budget also includes crisis mitigation measures such as allocations of about US$40 million for the restocking of the grain reserve and US$27 million for subsidies for the purchase of seeds.

20. To deal with the increased security risks arising from the situation in neighboring Mali, the authorities prepared a revised budget, which foresees increases in public expenditures on military equipment of about US$80 million. Furthermore, the revised budget also foresees increased government expenditures on the emergency food security program (US$56 million), on salary increases awarded on Feb 7, 2012 (US$24 million) and on several other items (US$18 million). These additional expenditures are fully funded from confirmed multilateral resources that were not included in the initial budget (IMF (US$34 million), WB (US$5 million), and EU (US$40 million)) as well as from reductions of expenditure allocations (US$99 million) for domestically financed investment and several other expenditure items. These budget adjustments were discussed with the IMF and the WB at the time of the Spring meetings in April 2012 and were submitted to the National Assembly for approval in May 2012. The African Development Bank is preparing a new budget support operation that would provide additional resources to deal with food insecurity in 2012 and 2013.

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Table 2: Central Government Operations, 2007-2012

2009 2010 2011p 2012rb 2013p 2014p 2015pDomestic Revenue (% of GDP) 14.7 14.4 15.7 18.0 19.0 19.1 19.7Current Expenditure (% of GDP) 12.1 13.7 14.8 13.4 13.4 13.8 14.2Capital Expenditure (% of GDP) 12.5 8.1 12.3 17.4 17.9 17.8 17.6 Fiscal deficit (excl. grants, % of GDP) -9.9 -7.4 -11.5 -12.9 -12.3 -12.6 -12.1Grants (% of GDP) 4.5 4.9 7.8 8.6 7.7 7.5 7.3Net. Conc. Foreign Credits (% of GDP) 1.3 0.9 4.0 4.7 4.9 5.2 5.1Domestic financing (% of GDP) 4.6 2.0 -0.2 -0.4 0.0 0.2 -0.1Source: IMF Note: p –projection, rb – revised budget 21. The main developments in the balance of payments are large foreign direct investment (FDI) flows in the mining and petrol sector. This includes the development of the Imouraren uranium deposit by the French energy company AREVA, which is the largest uranium deposit in Africa and the second largest worldwide. This investment is projected to make Niger the world’s second largest producer of uranium. China is also becoming a major investor in Niger, including in uranium and in the development of oil production in the Agadem block near the border to Chad, the building of a pipeline, and of a refinery in Ganaram.

22. These mining and oil sector projects are reflected in an increase in foreign direct investment from about US$116 million in 2007 to US$990 million in 2010. FDI is projected to remain at similar high levels between 2011 and 2013, as the oil and uranium projects are completed, but decline in 2014 to a projected US$113 million. Oil production started in November 2011 and the new uranium mine in Imouraren is expected to start production in 2014.

23. Capital goods imports for these FDI activities have resulted in a widening of the current account deficit from 13 percent of GDP in 2008 to 21.3 percent of GDP in 2010. For 2011, a further widening of the current account deficit (including unrequited public and private current net transfers) to 28.3 percent of GDP is projected with a gradual decline of the deficit in subsequent years.

24. With Niger being part of the WAEMU, its currency is pegged to the Euro and international reserve management takes place within the WAEMU mechanism. Net foreign assets (as months of imports) declined from 2.2 months in 2009 to 1.8 months in 2010 and are projected to recover to 2.1 months in 2011.

25. Credit to the private sector has grown by 12.1 percent in 2009, 7.7 percent in 2010, and 13.3 percent in 2011, with the financial and telecoms sector being the main beneficiaries. However, Niger’s financial sector remains severely underdeveloped with most of the rural economy and SMEs without access to credit. Financial sector depth (M2/GDP) increased from 19% by the end of 2009 to 22 percent by the end of 2011, but Niger remains well below the 41% percent average for Sub Saharan Africa. Credit to the private sector as a percentage to GDP has increased steadily from 6.8% in 2004 to 13.0 percent in 2010 and further to 14.2 percent in 2011. In February 2012, the authorities completed a financial sector development strategy and action plan. It envisages, among other things, improvements in the legal framework (including for mortgages and guarantees); steps to simplify the recovery of loans; measures to improve the functioning of the judicial system; training for bank

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employees; and a publicity campaign to bring the financial sector closer to the general population.

26. In 2009, President Tandja suspended the mechanism for an automatic alignment of domestic retail fuel prices with international fuel prices. Rising international oil prices and the depreciation of the Euro against the US dollar resulted in an explosion in the cost of fuel subsidies in 2010. In 2011, the transition Government implemented two increases in domestic fuel retail prices, which were, however, insufficient to significantly curtail the cost of these subsidies, which are estimated at about FCFA 30.3 billion in 2010 and FCFA 33 billion in 2011. The new Government has eliminated these subsidies by adjusting local retail prices in line with international prices starting in June 2011. In January 2012, domestic fuel prices from domestic production have been set above the cost of production, but below international market prices. The implicit subsidy inherent in the new price levels, as measured by the foregone revenue for the state, is projected in 2012 at about FCFA 4 billion (less than 0.1 percent of GDP). At present local fuel prices are similar to those in neighboring countries.

27. In summary, Niger continues to implement appropriate macro-economic policies that provide an adequate environment for DPO support. Government has been successful in maintaining macro-economic stability despite severe political and external shocks experienced between 2009 and 2011. Nonetheless, there are several issues that will need to be carefully addressed by Government to be able to sustain macro-economic stability. First, the start of petroleum production is expected to have a positive impact on Niger’s economy. However, it will be important to carefully manage domestic production cost of refined fuel products and pursue an adequate pricing policy. Similarly, to counter Dutch disease effects, increased attention will need to be paid to measures that would strengthen the competitiveness of the non-extractive sectors of the economy. Second the return to democracy and the ambitious program of the new Government have raised high hopes among the population which the Government is keen to fulfill. However, it will be important to ensure that the implementation of the government program is carried out in the context of a realistic macro-economic and fiscal framework. While the Government’s plans and efforts to significantly increase domestic and external resource mobilization are commendable, expenditure plans need to remain based on realistic resource projections and increases in expenditure commitments should only be undertaken once increased resource flows indeed materialize.

C. MACROECONOMIC OUTLOOK AND DEBT SUSTAINABILITY

28. The return to a democratic regime, large scale mining and petrol sector investments, and the sustained implementation of reforms provide a sound basis for sustained economic growth in Niger. Growth is projected to jump temporarily to 13.4 percent in 2012 on account of the start of oil production. The return to democracy has triggered the resumption of aid inflows which are estimated to have increased from 6.2 percent of GDP in 2010 to 12.6 percent in 2011 and are projected to rise further to 13.3 percent in 2012. However, Niger remains highly vulnerable to developments in the agriculture sector which generates 40 percent of its GDP and provides the livelihood for the large majority of Nigeriens.

29. As new mining and petrol sector investments come on stream starting in 2012, Niger’s current account deficit is expected to decline significantly and government revenue from the extractive industries is projected to increase by several percentage points of GDP in the medium term, depending on the evolution of uranium and oil prices. Uncertainty about the future worldwide development of nuclear energy sources and

9

the sharp decline in uranium prices observed since the catastrophic events in Japan in March 2011 add further uncertainty to Niger’s prospects, given the large role the uranium industry plays in Niger’s economy. If the inflow of people and weapons from Libya and conflict in Mali and Nigeria leads to a severe deterioration of the security situation in Niger, including increased security threats from terrorist groups, the resumption of insurgent activity, and increased criminal activity such as drug trafficking and smuggling, these could have a severe negative impact on Niger’s growth prospects.

30. The European debt crisis could dampen the development outlook for Niger through potentially negative impacts on development assistance, exports of uranium and oil, foreign direct investment, remittances, and exchange rate uncertainty. Although the risk of a reduction in development assistance to Niger may be limited, given that a significant share of aid comes from multilateral institutions and that Niger is one of the world's poorest countries and may thus not be a primary candidate for aid cuts, the scope for significant increases in aid to Niger to support the relaunch of its ambitious development program may also be limited. In addition, the European debt crisis could also limit Niger's access to foreign direct investment and non-concessional financing which the authorities are keen to pursue to contribute to the funding of their ambitious development program. In addition to already ongoing investment activities in the extractive industries, Government has also granted a large number of mining concessions that remain to be developed and which could be slowed down in an adverse international economic environment.

31. Furthermore, the European debt crisis creates additional uncertainty about the evolution of the exchange rate of the Euro, to which Niger’s currency (FCFA) is tied. Trade with the European Union accounts currently for about 40 percent of Niger’s exports (mostly uranium) and 25 percent of its imports. About 25 percent of Niger’s exports (mostly livestock and agricultural products) go to Nigeria and other neighboring countries, while 50 percent of its imports are from Asia. Niger is thus exposed to significant exchange rate risks on account of the large share of trade with countries outside the Eurozone and the FCFA zone and the fact that international prices for uranium and oil are usually determined in US$. The start of petrol production and exports further exposes Niger to increased exchange rate risk between the Euro and the US$. In recent months, the Euro has already depreciated significantly against the US$ and other major currencies. A further depreciation of the Euro could potentially have a positive impact on Niger’s revenue from its uranium4 and oil exports in local currency terms and make Niger’s agricultural exports more competitive, benefitting Niger’s farmers and exerting a positive impact on government revenue. About half of Niger’s imports are capital goods for large scale investment projects in the extractive industries sector and the exchange rate impact will likely depend on its impact on the overall profitability of these investment projects. Until 2011, about 15 percent of Niger’s imports were oil products, but as Niger has become an oil exporter it no longer imports oil. Imports of food account for between 10 to 15 percent of imports in years with a normal harvest, but can increase significantly in years with a bad harvest such as in 2010. A depreciation of the currency would thus primarily affect urban populations, but in a year with a bad harvest it could have important consequences for food security in Niger. Among the remaining imports, agricultural inputs such as fertilizer, pesticides, and agricultural implements deserve particular attention, as a depreciation of the exchange rate would increase the cost for government and farmers and thus potentially affect negatively Niger’s ambitious program for agricultural development and food security. With respect to the overall evolution of Niger’s balance of 4 The price of Niger’s uranium is typically determined on an annual basis in negotiations with the mining company and aligned with international uranium prices.

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payments, a depreciation of the exchange rate would result in a narrowing or the current account balance (which stood at 32.4 percent of GDP in 2011), which is mainly financed from FDI and aid inflows. Work on the development of a dynamic general equilibrium model for Niger is currently underway which will support further analysis of the impact of real exchange rate changes.

32. Niger is a beneficiary of HIPC and MDRI debt relief. Results from the latest debt sustainability analysis (DSA)5 based on end-2010 data show an increased risk of debt distress due to an increase in debt levels, mainly on account of borrowing and guarantees for Government engagement in the mining and petrol sectors. The main external debt ratios remain below their thresholds under the baseline, but breach them in the most extreme stress scenario. Niger has thus been classified as being at moderate risk of debt distress, after having moved from moderate to low risk of debt distress on the basis of the previous DSA. Enhanced public financial management and a prudent debt policy are key to preserving debt sustainability and ensuring the efficient use of available fiscal space. Niger’s increased risk of debt distress underlines the need to minimize borrowing on commercial terms for public investment projects, and limit as much as possible the Government’s involvement in the financing of natural resources projects.

D. POVERTY AND MDGS

33. Poverty is deeply entrenched and most MDGs are out of reach for Niger. Between 2005 and 2007/08, rural poverty declined from 68.6 percent to 65 percent and urban poverty from 44.2 percent to 41.4 percent.6 Over the same period, the depth of poverty has decreased. Analysis undertaken for a recent Poverty Assessment in Niger indicates that recent economic growth has been pro-poor, as the poor have benefitted more from growth than the non-poor during the period 2005 to 2007/8. However, it is important to note that the relative short period between these surveys and the presence of significant weather related shocks during that period7 makes it difficult to discern a secular trend from these results with certainty. The LSMS survey which will generate poverty data for 2011 and 2014 is expected to allow a more conclusive analysis of poverty trends.

5 IDA and IMF. 2011. Niger Joint Bank-Fund Debt Sustainability Analysis. November 3, 2011. 6 These poverty estimates have been revised by the World Bank to incorporate the impact of differences resulting from incomparable survey methodologies between 2005 and 2007/08. Both rounds of estimates were prepared originally by the National Institute of Statistics. 7 The 2005 survey data collection was preceded by a period of significant drought and a dramatic reduction in food access for the rural population. Both reduced production income and increased grain prices would have negatively affected rural consumption. The subsequent 2007/08 survey, in contrast, was preceded by favorable weather conditions for grain production that resulted in positive gains to rural productivity.

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Figure 2: Trends in the Human Development Index for Niger, Mali, Mozambique and the Average for Sub-Saharan Africa, 1980-2011

34. UNDP’s human development index and its subcomponents show an improvement of Niger’s social indicators over the past three decades, with Niger being among the 10 countries that achieved most progress in percentage terms, although from a low base. According to this index, progress is particularly impressive on the health index where over the past 30 years Niger was able to catch up with the average for Sub-Saharan Africa, while little progress was achieved on the income index, where the distance to the Sub-Saharan average actually widened.

35. Over the past five years, Niger has made important efforts to improve health sector outcomes, but it is still behind the MDG’s health targets: under-five mortality has decreased from 198 to 130.5 per 1,000 live births between 2006 and 2010; maternal mortality declined from 648 to 554 per 100,000 live births; infant mortality declined from 81 %o to 63.2%o; as the number of births attended by skilled personal increased from 18 percent in 2006 to 33.5 percent in 2011 and the use of bed nets from 7 percent to 64 percent. Despite efforts made to increase: (a) the coverage of measles vaccination from 66% in 2006 to 88.6% in 2010; (b) the treatment of malnutrition from 27% to 100%; and (c) the ante-natal care coverage from 50 percent to 91 percent in 2010, the leading causes of mortality for children under 5 remain malaria, respiratory diseases, diarrhea, measles, malnutrition, and other tropical communicable and parasitic diseases. Rapid population growth, low incomes, and the inadequate health care result in a poor nutritional status for much of the population with a global acute malnourishment rate that ranges seasonally between 9.5 and 14 percent, even in years of normal harvest. Data from end-2005 indicate that HIV/AIDS prevalence among young women (15-24) is 0.8 percent, four times higher than prevalence among males of the same age (0.2 percent). HIV/AIDS prevalence is still high in high-risk groups such as commercial sex workers and truckers.

36. Access to education has also improved significantly in recent years. The number of preschools increased by 44%, passing from 826 preschools in 2010 to 1283 in 2011 and the access to pre-schooling increased from 4.6% (2009-2010) to 5.7 % (2010-2011). Primary enrollment has increased significantly: the gross enrollment rate has increased from 72.9 percent in 2009-2010 to 76.1 in 2010-2011. Although the completion rate is still low, the

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threshold of 50 percent has been surpassed, passing from 49.3 percent (2010) to 51.2 percent (2011). In the meantime, significant challenges remain in addressing learning outcomes, but they are improving based on comparison between 2007 and 2011 learning assessment results. The average score in Math for Grade 2 students has increased from 32.7/100 in 2007 to 61.51/100 in 2011. In French this average score passed from 37.1/100 to 45.9/100. The same trend was noted for grades 4 and 6 students for the two subjects (Math and French). Though these results remain weak, the new trend shows a positive impact of the relevant strategy implemented. Secondary education remains poorly developed with a GER of 16.6% and 3.4% (2009) respectively in lower and upper secondary. Technical and vocational education and training (TVET) is limited: students enrolled in TVET represent 3.7% of all students enrolled in secondary education (general and TVET). Access to tertiary education is also low at an estimated coverage of 104 students per 100,000 inhabitants.

37. Improvements in education and health have resulted in a substantive improvement in opportunities to acquire human capital. According to the recent poverty assessment, the human opportunity index - which is a coverage ratio that takes into account the equity of access to basic services – for children’s education and health, rose sharply between 1998 and 2006. This reflects both the expansion of coverage to all groups (scale effects) and the narrowing of gaps in coverage between groups differentiated by wealth, location (urban/rural), regions, ethnicity and so on (equalization effects). Despite efforts to close the coverage gap, rural children, and in particular, rural girls remain at a significant disadvantage to achieving primary school enrollment. Physical isolation and distance to school constitute major impediments to improving equity of access.

38. Gender imbalances remain severe and need increased attention by policy makers. UNDP’s 2010 Gender Inequality Index highlights the plight of women in Niger, with its maternal mortality ratio and adolescent fertility rates being among the world’s highest, while antenatal coverage rates and the share of births attended by skilled health personnel are among the world’s lowest. Gender disparities with respect to representation in the National Assembly, participation in the labor force, and the level of education are severe. But progress has been achieved in some areas. The number of girls going to school increased by 57 percent between 2002 and 2008, while the number of girls repeating a grade declined, resulting in an increase in the girls’ gross enrollment ratio from 24 percent to 51 percent.8 Implementation of the Government’s Declaration on Population Policy supported by an IDA investment project has shown some positive results in improving knowledge of contraceptive methods and the contraceptive prevalence rate. Project estimates report that contraceptive knowledge among 15 - 49 year old women increased from 55 to 77 percent and the prevalence rate increased from 5 to 15.6 percent in 2010. The newly elected President has announced specific measures to improve the situation of women in Niger, including the recruitment of health sector personnel and mid-wives, significant scaling up of education expenditures, and the establishment of a fund to support income generating activities for women. The objective of universal education until the age of 16 is expected to close both gender gaps in education and lead to an increase in the average age of first marriage for females, which currently is 15 years. Large increases in education expenditures to scale up the number of class rooms and trained teachers would be needed to make these measures realistic.

39. Natural resources degradation, population growth and climate change pose serious challenges to medium and long term food security in the country. Of special

8 Fast-tracking Girls’ Education - A progress report by the Education for All – Fast Track Initiative. March 2011.

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concern is the interaction of soil degradation and climate change, which call for urgent changes in land management technologies and practices. More than 50% of the population is affected by food insecurity, with 22% of the population chronically extremely food insecure. About 84% of the population depends on natural resources that are highly vulnerable to climate factors. Poor households, particularly female-headed households, are more exposed to shocks and seasonal variations in production, in response to which they often resort to negative coping mechanisms such as the sale of seeds and productive livestock. The Government recognizes that the development of the country depends largely on its ability to better manage all its natural resources, by promoting a more holistic approach, oriented towards the stakeholders, particularly rural communities. It is within this context that, over the last years, national institutions have been created and/or strengthened with a direct link with climate vulnerability and change, and key strategies and programs have been developed. The institutional landscape on environmental issues in general, and on those related to climate variability and change in particular, is very rich and diverse in Niger. Niger is one of nine countries involved in the Pilot Program for Climate Resilience (PPCR), which offers Niger an opportunity to effect significant changes in scaling up its investment in efforts to reinforce climate resilience and incorporating climate resilience into its overall development strategies and planning.

40. Niger is among the world’s four countries with the least secure supplies of water. Expanding the country’s water and sanitation programs is therefore crucial to spurring growth and sustaining economic development, and achievement of the Millennium Development Goals (MDGs). Over the last decade, access to improved water services increased from 52 percent to 64 percent in rural areas and from 65 percent to 74 percent in urban areas. For sanitation, access to improved and unimproved facilities improved from 20 percent to 79.8 percent in urban and from less than 2 percent to 7 percent in rural areas. Ongoing institutional reform has significantly improved the quality of water service delivery in urban areas and efficiency of operations. The ongoing urban water reform which is recognized as a best practice innovative PPP model, has demonstrated that cost recovery and financial autonomy in a public sector can be achieved in difficult conditions like in Niger.

41. Despite the improvements noted above, Niger remains behind on most of the Millennium Development Goals (MDG’s). With the exception of the MDGs on reducing child mortality and combating HIV/AIDS, malaria, and other diseases, Niger is currently unlikely to achieve any of the MDGs. However, the new Government has made progress against the MDGs one of its core objectives and is seeking to mobilize domestic and external resources to scale up spending on the MDGs. During the first year of being in office, the new Government has recruited about 7,200 contract teachers for primary (6,500) and secondary (729) education, 535 doctors, 1182 mid-wives, registered nurses, and health technicians, and provided training to more than 3,300 teachers.

E. NIGER’S GROWTH CHALLENGE

42. Niger has one of the world’s lowest per-capita incomes at around US$ 720 at purchasing power parity in 2010. The low per-capita income translates directly into wide spread poverty and very limited domestic government revenue to fund development programs.

43. Niger’s historical growth performance has been disappointing with a decline in real per capita incomes by more than 30 percent between 1980 and 2000. Following a short lived uranium boom in the 1970s, Niger experienced a continuous decline in per capita incomes until around 2000. Annual average growth between 1960 and 2000 was a mere one

14

percent. A renewed focus on macro-economic stability and economic reforms has resulted in a significant increase in average growth to 4.7 percent during the period 2001-2010. However, as Niger has one of Africa’s highest population growth rates estimated at 3.3 percent per year, these economic growth rates were insufficient to bring about increases in per capita incomes. Indeed, during the period 1981 to 2000, per capita incomes declined on average by about 2 percent each year. Only since 2000 has there been a slight recovery of per-capita incomes which grew by about one percent on average. Nonetheless, this is clearly insufficient to reduce Niger’s high levels of poverty quickly.

Figure 3: Per-capita Incomes and Economic Growth, 1960-2010

Niger’s per capita GDP in 2009 is 30 percent lower than it was in 1980…

.. as Niger has not been able to generate sustained high growth, while its population growth rate is

increasing and one of the highest worldwide

44. The focus on increasing per capita income growth is central. After more than three decades of declining or stagnating per capita incomes, promoting economic growth remains vital for Niger’s development and poverty reduction. The main elements to support economic growth defined in the Africa Region strategy – namely strengthening infrastructure, the business environment, and technical skills are all highly relevant for Niger. The series of SGCs will support selective policy reforms in these areas.

45. In the medium term, scaled up production in the uranium and petrol sector will be the primary driver of growth. The new Azelik uranium mine, developed in collaboration with a Chinese investor, started its operations in 2011. It is expected to reach a maximum capacity of 700 tons per year in 2012. The new Imouraren mine, developed with a French investor, will produce 5,000 tons per year, starting in 2014 and reaching maximum capacity in 2017, doubling current total production. Niger started producing oil in November 2011. The project, developed in collaboration with a Chinese investor, includes the Agadem oil field, a refinery in Zinder, and a 460 kilometer pipeline linking both. The field’s output capacity is estimated at 20,000 barrels per day, to be sold exclusively to the refinery. One third of the refinery’s output will be domestically marketed by the public oil company (SONIDEP), with the remainder to be exported. In the future, the field is likely to yield more crude oil, which would then be exported. These developments are projected to boost economic growth in 2012 to 13.4 percent and sustain it around 7 percent in the medium term. Unfortunately, the impact of these extractive industry developments on employment is expected to be small, though not negligible. Economic management will need to focus on translating the increased government revenue generated by these investments into growth enhancing and poverty reducing programs, while at the same time seeking to prevent Dutch disease effects that could harm the competitiveness of the economy.

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46. As the growth impact of the large scale extractive industry investments peters out, sustained economic growth and employment generation will depend on scaled up productivity in the agriculture sector and the diversification of the economy. Given Niger’s endowments in terms of natural and human resources, there are several areas of diversification that have potential: First is the diversification of natural resource exploitation beyond uranium. The analysis of geological formations suggests significant potential for gold, base metals, and coal and Government is actively seeking to promote this diversification within the mining sector. Second is the promotion of mining sector related activities by strengthening the linkages between the mining sector and the rest of the economy. Third are agriculture sector related activities, in particular related to processing and trade in agricultural products (e.g., meat and hides). Fourth is the scaling up of non-agricultural, non-mining activities that currently take place primarily in the informal sector. As the experience of many East Asian and other successful developing countries has shown, an export-led growth strategy and attracting Foreign Direct Investment are key elements for generating accelerated growth. Diversification of the economy requires a host of measures including improvements in the regulatory regime for businesses, facilitation of internal and international trade, preventing Dutch disease effects from an expanding mining sector and large inflows of development assistance, supporting SMEs, improving access to financial services and developing a supportive infrastructure and adequate human resources.

47. Frequent droughts, political instability, and fluctuations in revenue from Niger’s mineral exports have contributed to high volatility in Niger’s growth rate. Niger’s extreme vulnerability to climatic shocks and developments in the global demand for uranium is a result of the undiversified structure of the economy and the low per capita income, which leaves no room to absorb or mitigate the impact of shocks. These economic shocks have not only resulted in low or negative growth during the years when they occurred, but high volatility is also likely to have slowed down the development process both at the national and at the household level. At the national level, these frequent shocks have disrupted the implementation of development programs and diverted Government attention and resources from long term development to short time crisis management. At the household level, such shocks are likely to have long term impacts through their impact on human and physical asset accumulation. The long term effects of malnutrition or the withdrawal of children from school on household incomes are well documented and also confirmed in the recent poverty assessment for Niger.

48. Accelerated growth and diversification of the economy are thus critical to reducing the vulnerability to external shocks. A particular focus would need to be on agriculture, to reduce its vulnerability to weather related shocks through investments in irrigation and improved research and extension services that would promote the adoption of agricultural methods that are less subject to the vagaries of Niger’s harsh climate. The effects of climate change potentially further increase the incidence of and vulnerability to adverse weather events and desertification. Efforts for climate change adaptation to increase resilience will thus be critical. At the household level, this will have to be accompanied by a strengthening of social safety nets that allows them to preserve productive assets and prevent a degradation of human resources to avoid negative effects on long term growth prospects.

49. Finally, in addition to accelerating economic growth and reducing volatility, reforms need also to ensure that growth is inclusive and its benefits widely shared. This will require a strong sectoral focus of reforms on agriculture and livestock, which is the source of livelihood for about 80 percent of the population. The mining sector plays a central role in Niger’s economy and production, exports, and government revenue from the mining

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sector are projected to increase significantly over the next few years. This requires a focus on public financial management to ensure that the development of the mining sector translates indeed into increased resources and spending for PRS priority areas. Last but not least, inclusive growth requires also increased attention to the gender dimension of the growth process to ensure that women can fully contribute, participate, and benefit from growth. Niger ranks at the very bottom of UNDP’s Gender Inequality Index. As highlighted in the 2012 WDR, deep gender inequalities not only exclude a significant share of the population from the development process, but they also result in a significant loss of economic growth. Reforms to promote inclusive growth need thus ensure that both men and women can attain access to productive resources. Close attention needs thus to removing gender inequalities and support women’s participation in economic growth opportunities by mainstreaming the gender dimension into the reform process.

50. To summarize, increasing per-capita incomes is Niger’s central challenge in its efforts to reduce poverty. However, given the structure of Niger’s economy, poverty reducing economic growth requires a focus on three tightly interwoven issues:

Accelerating economic growth;

Reducing growth volatility and enhancing resilience to external shocks; and

Ensuring that growth is inclusive and widely shared.

III. THE GOVERNMENT’S PROGRAM AND PARTICIPATORY PROCESSES

51. Upon taking office in April 2011, President Issouffou spelt out the new Government’s policy priorities in his inaugural speech. The declaration of government policy presented by the Prime Minister in June 2011 provides more detail on the key objectives and priority areas of government action. This program of the new Government is broadly consistent with PRSP-II. The new Government has strengthened its focus on economic planning and coordination through the creation of the new Ministry of Planning, Regional and Community Development. A new planning framework is currently under preparation, which would include a long term strategy for inclusive growth until 2035, a plan for economic and social development plan for the period 2012-2015 (which would be the follow on to the current PRSP), and an interim framework for government action covering the period 2011-12. The proposed SGC series developed with the new authorities reflects the priorities spelt out in the government program, which will be further developed in the Government’s Plan for Economic and Social Development.

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Box 1: Key Elements of the Government Program

The government program presented by the Prime Minister of Niger to the National Assembly in June 2011 focuses on three strategic objectives:

Promoting good governance;

Promoting social development; and

Promoting economic growth and sustainable development.

Among the priority areas for the achievement of these strategic objectives are the following:

Pursuit of food security through the implementation of the 3N initiative (Nigeriens nourish Nigeriens);

Transparent exercise of Niger’s sovereignty over its natural and mining resources in order to provide the country with the resources necessary for investment;

Restructuring of the economy, in particular through an increase in the weight of the secondary and tertiary sectors;

Improvement of social indicators in the education and health sectors in order to strengthen human resources to be able to meet the demands of development; and

Mobilization of domestic and external resources to accelerate the achievement of the MDGs and to ensure growth and employment.

Recognizing good governance as the foundation for the achievement of the government objectives, the government program proposes a comprehensive approach involving political, administrative, and economic governance, security, restoration and consolidation of the rule of law and human rights, and improved local governance.

IV. BANK SUPPORT TO THE GOVERNMENT’S PROGRAM

A. LINK TO CAS AND THE AFRICA REGION STRATEGY

52. The Country Assistance Strategy (CAS) covering FY08-11, presented to the Board on May 29, 2008, is built around two pillars: (i) accelerating sustained growth that is equitably shared; and (ii) increasing access to basic services and developing human capital; and two cross cutting issues that cover demographics and good governance. With respect to the instrument choice, the CAS proposes to deliver about one third of IDA resources in the form of DPO-type operations.

53. Preparation of a new CAS will be carried out in FY13, building on the Government’s Plan for Economic and Social Development. The draft CAS completion report prepared in FY12 confirms the strategic relevance of the current CAS. Based on preliminary discussions with the authorities, it is expected that the new CAS will retain the focus on accelerating economic growth that is widely shared, with development policy support operations remaining an important instrument for Bank support. The Bank’s policy framework for programmatic development policy operations provides sufficient flexibility to make adjustment to the policy and results framework underpinning the series in order to ensure full alignment between the new DPO series, the new CAS and the new PRSP. However, as the Government and the Bank teams responsible for the preparation of the DPO series, the new PRSP, and the new CAS significantly overlap, it is expected that the need for such adjustments will be small and mostly be limited to the area of results indicators and targets.

54. The policy reforms supported by this operation contribute to the two pillars of the Africa Region Strategy – competitiveness and employment and vulnerability and

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resilience, as well as to the foundation of the strategy – governance and public sector capacity. Reforms aimed at reducing barriers to economic growth through an improved business environment will contribute to both pillars by supporting the attainment of higher growth and the diversification of the economy. Diversification of the economy is expected to reduce the economy’s vulnerability and enhance its resilience to external shocks by broadening the economic base and reducing the dependence on undiversified mineral exports and drought prone agriculture. Improved extension and irrigation services are expected to allow farmers to adopt agricultural practices that make them more competitive and less vulnerable to climatic shocks. The measures aimed at improving public expenditure and financial management will directly support improved economic governance.

B. RESULTS ACHIEVED UNDER GPRG-1 AND GPRC-2

55. The Growth Policy Reform (GPR) programmatic series of two development policy operations (GPRG-1 and GPRC-2) aimed to help overcome policy constraints and institutional bottlenecks to growth by: (i) improving the business environment, (ii) enhancing road maintenance, (iii) promoting rural sector growth, and (iv) pursuing public financial management reforms.

56. Results achieved under GPRG-1 and GPRC-2 need to be considered in the context of the political and food crisis that erupted following Board approval of GPRG-1 on March 24, 2009 and which dominated the political and economic agenda for most of 2009/2010. The political crisis resulted in a delay in the effectiveness of GPRG-1 until May 2010. GPRC-2 was approved by the Board in June 2011 and declared effective in October 2011 and is scheduled to close in June 2012.

57. The financial support provided in 2010 and 2011 through GPRG-1 and GPRC-2 has been critical in allowing Government to maintain macro-economic and fiscal stability in the face of multiple pressures emanating from the political and food crises. As Government had to deal with a severe food crisis and budget support from most other donors was on hold following the coup d’état in February 2010, IDA’s quick review of the country situation under O.P. 7.30 and the decision to declare the grant effective in May 2010 provided the transition Government with essential budgetary resources to continue the implementation of pro-poor expenditure programs while at the same time also scaling up programs to deal with the food crisis and external security threats, and to prepare elections for the return to a democratically elected regime. IDA’s decision to declare GPRG-1 effective also sent an important signal to other budget support donors which subsequently resumed their disbursements in the course of 2010. At the time of effectiveness of GPRC-2 in October 2011, Government had to deal with the massive return of migrant workers from Libya and an emerging severe cereal deficit due to another poor harvest following late and insufficient rainfalls in many regions of Niger. Government programs to deal with these two crises created an unanticipated financing gap which jeopardized the achievement of GPRC-2 objectives. On February 23, 2012, the Bank’s Board approved thus a supplemental financing to GPRC-2 in the amount of US$15 million.

58. GPRG-1 supported the repayment of arrears to private enterprises in the amount of FCFA 2.5 billion (which presents 0.7 percent of credit to the private sector) to help these enterprises rebuild their working capital. Further measures to improve financial management have both eliminated the re-accumulation of arrears to the private sector and

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reduced the time it takes for private enterprises to receive payment from Government for goods and services provided from about a month to an average of less than 10 days.9

59. GPRG-1 and GPRC-2 also aimed at enhancing access to financial services through the recreation of a new postal bank (FINAPOSTE) with a nationwide branch network. Government carried out the repayment of frozen deposits of the Caisse Nationale d’Epargne (CNE), which previously provided post office financial services. However, the transition Government concluded that the creation of a competitive postal bank would be too costly and adopted a strategy of seeking partnerships with existing financing institutions to offer banking services in post offices. Agreements with providers of mobile banking services have been concluded. The spread of mobile phone based banking services has far reaching impacts. For example, a recent study shows that these services allow the more efficient delivery of cash transfer programs, especially in areas with limited road and financial infrastructure.10

60. GPRG-1 and GPRC-2 supported the strengthening of road maintenance through increased levels of funding. Road maintenance expenditure increased from FCFA2.7 billion in 2008 to FCFA4.8 billion in 2009, FCFA5.1 billion in 2010, and FCFA6 billion in 2011. However, the Government decision of not fully passing through international oil price increases to domestic fuel prices, which was in place from 2009 to 2011, resulted in reduced transfers of fuel levy receipts to the road maintenance agency. Increased spending on road maintenance was accompanied by more effective control of overloading. While current levels of road maintenance are still significantly below the estimated amounts for complete maintenance, further increases in spending will need to be accompanied by measures to strengthen capacities and institutional arrangements for managing and monitoring the quality of road maintenance work.

61. The GPR series supported the initiation of reforms of agricultural institutions with the aim of increasing access and use of agricultural inputs and technology. The main focus of these reforms was to increase transparency in the management of the Central Procurement Unit for Agricultural Inputs (CAIMA) through the inclusion of farmer representatives in its governance organs. As the new Government is seeking to scale up support to producers through CAIMA, the impact of these reforms on a fair and transparent process for the distribution and pricing of agricultural inputs – mainly fertilizer but also seeds and related inputs – is likely to be even more significant than initially envisaged. The adoption of an integrated framework for agricultural extension services provides the basis for future reforms that will be supported by the West African Agricultural Productivity project.

62. The GPR series also supported reforms of the public procurement system to ensure transparent and effective control of contract awards during the opening and technical evaluation of bids. The revision of the legal framework established a unique committee responsible for bid opening and contract award and adjusted the composition of bid evaluation committees in order to prevent conflicts of interest. Legislation for a new procurement code has been submitted to the National Assembly. However, questions regarding the appropriate legal form of the procurement code, which in the end required a change in the constitution, led to delays in the adoption of a new procurement code.

9 Ministère de l’Economie et des Finances. Analyse de la rapidité dans l’établissement des ordres de paiement. Janvier 2011. 10 Aker J., R. Boumnijel, A. McClelland, and N. Tierney. 2011. Zap it to me: The short-term impacts of a mobile cash transfer program. Center for Global Development Working Paper No. 268. September 2011.

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63. GPRG-1 supported the creation of an appropriate institutional setup for the implementation of Government’s Declaration on Population Policy (DGPP) at the central, regional, departmental, and communal level. This has established the basis for the implementation of annual action plans with funding from the general budget as well as support from an IDA grant and other donors (e.g., UNFPA). Available data suggest already some positive impact of the implementation of the policy, including the increase in exclusive breastfeeding from 13.5 percent in 2006 to 27 percent in 2010 and an increase in the use of modern contraceptives from 4.4 percent in 2006 to 16 percent in 2010.

C. COLLABORATION WITH THE IMF AND OTHER DONORS

64. The World Bank has been closely collaborating with the IMF and other donors in the preparation of this operation. In particular, under the leadership of Government, the WB, the EU, and the AfDB are working closely together in the development of a harmonized, multidonor budget support framework for Niger. A draft cooperation framework and a draft common policy matrix have been prepared. The joint review process foresees two annual reviews of the policy and results framework to assess progress. The objective of these harmonization efforts is to increase coherence and complementary of policy dialogue between Government and providers of budget support and to reduce the transaction cost for the authorities. Nonetheless, under this evolving harmonized budget support process, each donor will remain independent to make financing decision. The harmonized budget support process is open to other providers of general budget support, which include France, and providers of sectoral budget support, which include Belgium and Denmark.

65. IDA also coordinates and collaborates closely with the IMF on macro-economic, fiscal, and growth related policy issues. In general, the World Bank leads the policy dialogue on structural reforms, rural development, social sector reform (particularly in the education and health sectors), and poverty monitoring. In addition, the World Bank leads the exchange of information and collaboration on local development in Niger. The IMF leads the policy dialogue on macroeconomic management, and fiscal and monetary policy. The World Bank and IMF share joint responsibility on the poverty reduction strategy, debt sustainability, public expenditure reforms, financial sector reforms, civil service reform, and decentralization. The proposed SGC series will be in parallel to the three year ECF support by the IMF which was approved on March 16, 2012. The focus of the new IMF program is on (i) maintaining macroeconomic stability and increasing resilience to shocks; (ii) fiscal policy reforms; (iii) enhancing the management of natural resources; (iv) strengthening public financial management; (v) strengthening debt management; (vi) private sector development; and (vii) ensuring effective bank supervision and development of financial intermediation. SGC and ECF support have been prepared in close coordination between the IMF and World Bank teams and provide complementary and mutually reinforcing support.

66. Many of the reforms supported by this credit are underpinned by collaboration between the authorities, the Bank and other donors at the sectoral or thematic level, either in the context of sector development programs such as in health and education, formal coordination mechanisms such as the public finance working group, or through collaboration at the project level.

67. The proposed credit also builds on coordination with IFC. In particular, technical assistance provided by IFC to the authorities to identify measures to improve the business environment along the dimensions of the “Doing Business” assessment provides important guidance for Government’s reform program supported by this operation.

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D. LESSONS LEARNED

68. Lessons drawn from the experience of implementing previous development policy operations in Niger relating to government ownership, alignment with the Government’s budget cycle, one-tranche design, are highly relevant and have been reflected in the design of this operation. The draft CAS Completion report for Niger highlights two specific lessons drawn from DPO support between 2008 – 2012:

First, the strongest impact is achieved when multi-sectoral DPOs are delivered in parallel with sectoral operations, creating substantial synergies. And particularly so in areas where reforms are difficult and need sustained commitment and actions from the Government. An optimum strategic approach to help achieve CAS (and more broadly PRSP) objectives relies in a mutually reinforcing combination of investment and development policy support and AAA. A balanced mix of DPOs, investment and TA operations, and AAA, carefully tailored to the country’s needs and particularly capacity is essential. Reflecting this lesson, the focus areas and policy reforms supported by the SGC series are thus closely aligned with the Bank’s investment portfolio in Niger, as discussed below.

Second, for a country like Niger budget support plays an important role in buttressing the functioning of Government: predictable and sustained budget support plays a bigger role in Niger than in countries with a higher revenue base and less external stress. A programmatic DPO approach plays an important role in keeping the reform agenda on track and mobilizing the Government on cross-cutting issues in an environment of frequent external shocks and instability. This lesson has informed the decision to proceed with a new programmatic DPO series for Niger in parallel to the ongoing preparation of a new PRSP rather than waiting for the completion of the PRSP before embarking on a new DPO series.

69. Further lessons of relevance to the Nigerien context and which are reflected in the design of this operation include:

In a context of weak government capacity for policy design, implementation, and coordination, harmonized budget support can play an important role to support prioritization of reforms and coordination. Efforts to develop a common policy and results framework and a dialogue structure that would bring together sectoral ministries responsible in the key areas of public financial management, shared economic growth, and social development will support the government coordination and implementation of a prioritized reform program.

The 2011 World Development Report on “Conflict, Security and Development” highlights that donors need to take fragility into account in the design of their assistance program. Although Niger is not formally a fragile state since that rating of the quality of its institutions and policies is above the threshold for fragile states, repeated coup d’états throughout Niger’s history, its very low per capita income and consequently very limited resources for the authorities, the severe vulnerability to external shocks, including climate change, and the severe security threats and spillovers from conflict in neighboring countries introduces a great element of fragility and risk. In such an environment, predictable programmatic budget support has a particular role to play, as it provides essential resources for the delivery of public services. This is also important for political stabilization as it helps to strengthen the credibility of the elected Government. The new Government of Niger is highly

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conscious of the need to demonstrate that an elected Government is able to perform better than the previous regimes.

The 2012 World Development on “Gender Equality and Development” also is highly relevant to Niger’s development challenges and the proposed programmatic DPO series. The confluence of underdevelopment, poverty, and traditional and religious norms all contribute to Niger ranking very poorly on most indicators that measure gender equality. The preparation of this new harmonized budget support program has paid particular attention to identifying opportunities and entry points for promoting gender equality. The joint policy matrix already targets specific gender related outcomes for the delivery of education and health services. Dialogue on the budget and analytic work on gender aspects of key reforms supported by this programmatic series is expected to help further mainstream gender issues into the development agenda. At the same time, discussions with stakeholders in Niger have also emphasized the risks of creating the perception that gender related reforms are externally driven and have highlighted the criticality of having domestic constituencies that take the lead in promoting key reforms. There are thus no explicit gender related prior actions and triggers included at this time.

E. ANALYTICAL UNDERPINNINGS

70. The reform program supported by SGC-1 is informed by analytic work prepared by the Government, the Bank, other development partners, as well as local and international research institutes.

71. provides an overview of key pieces of recent analytic work that inform the policy dialogue in the policy areas supported by SGC-1.

72. At the request of the transition Government, the Bank prepared in early 2011 a set of 15 policy notes on reform priorities in key areas and sectors. These sector notes summarize the Bank’s knowledge from its operational, advisory, and analytic activities and have been shared with the new Government. A Country Economic Memorandum prepared in 2007 identifies priorities for accelerating growth and achieving the Millennium Development Goals. A Diagnostic Trade Integration Study (DTIS) prepared in 2008 and an Investment Climate Assessment prepared in 2006 further deepen the understanding of drivers of and key constraints to growth. They identify the mining sector, agricultural niche products including onion, cow peas, sesame, tigernuts and Arabic gum, meat, leather and animal skins, and handicrafts as the areas with the greatest potential for export development. Reforms supported by the SGC series – scaled up investments in infrastructure, reforms of the regulatory environment and the tax system, and reforms of agricultural institutions are identified as key for enhancing growth and diversifying the economy. It is envisaged that the SGC series would be accompanied by a series of policy notes on economic growth that would provide in depth analysis on specific issues and help inform reforms. Currently, a policy note on the macro-economic and poverty impacts of the expansion of the extractive industries sectors is underway. Further notes would analyze gender dimensions of the economic growth process and apply the growth identification and facilitation framework to Niger.11 In addition, a growth diagnostic currently prepared with the support of the Millennium Challenge Corporation (MCC) will also be highly relevant for the proposed series of development policy operations.

11 Lin, Justin Yifu. 2012. New Structural Economics: A Framework for Rethinking Development and Policy.

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Table 3: Analytic Work Informing the Reform Program Supported by the SGC Series

Policy Area 1 : Business environmentSector Policy Note on Growth and Diversification (2011), CEM (2007), DTIS (2008), Doing Business Country Reports (Annual), FSAP (2008), IMF studies on tax and customs reform Sector Policy Notes on Transport and the Power Sector (2011), Energy Sector Study (ongoing) Sector Policy Note on Education (2011), Study on Skills for Economic Growth (2010) Policy Area 2: Agriculture and Rural DevelopmentSector Policy Note on Agriculture (2011), Studies on the reform of the agricultural input and extension services prepared by FAO and the EU, Irrigation Sector Study (2009) Food Security and Safety Nets report (2009) Study on managing agriculture sector risks (ongoing) Policy Area 3: Efficacy of Public SpendingSector Policy Note on Public Financial Management (2011), PEMFAR II (2010), Expenditure Tracking Study (2009)

73. Each prior action supported by this credit is underpinned by specific analytic work. The annual Doing Business Country Reports helped to identify and monitor progress with respect to regulatory reforms to improve tax administration and trade procedures. IMF studies of the tax and customs regime guide the reforms of the fiscal regime for businesses. Reforms of the technical and vocational training system are grounded in a Bank study on skills for development, which reviews in detail the contribution of all elements of Niger’s education system to economic growth and proposes reforms. Analytic work on the energy sector is underway and will, together with an operational and financial audit of the Nigerien power company, a tariff study, and the preparation of a financing model underpin the sector reforms that are expected to be supported by the third operation in this series.

74. Reforms of the agriculture sector institutions draw on an irrigation sector study prepared by the Bank and a series of studies funded by the FAO and the EU, including comprehensive consultative processes with all stakeholders. A study on agricultural risks and food security is currently underway and will support the dialogue on the reforms of institutions dealing with risks, including of the Nigerien Food Office (OPVN) which is foreseen for the third operation in this series.

75. The second Public Expenditure Management and Financial Accountability Review (PEMFAR II) prepared in 2009 provided the basis for Government’s prioritized action plan for public finance reform and underpins the dialogue on public expenditure management reforms. It provides a detailed analysis and recommendations covering the management of revenue from the mining and oil sector, public expenditure policies, public financial management systems, and the government procurement system. It is envisaged that the SGC series would be accompanied by an annual Public Expenditure Review process that would deepen the dialogue on public expenditure policies and reforms and provide regular analysis and information on recent developments.

76. A poverty assessment has been recently completed and provides an assessment of recent poverty trends based on the 2008 Household Budget Survey and discusses in depth the impact of agriculture sector reforms on poverty. It also provides analysis of gender related aspects of poverty. Further work on the gender impact of the reforms supported by the credit is envisaged. Similarly, poverty and social impact assessments of

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selected reforms are envisaged. This includes a PSIA on tax reforms which is already underway and potentially a PSIA on energy tariff reforms.

F. RELATIONSHIP TO OTHER BANK OPERATIONS

77. The SGC series is an integral part of the World Bank’s Niger portfolio. IDA’s strategic approach relies in a mutually reinforcing combination of investment and development policy support as well as analytical and advisory activities to help Niger achieve the CAS objectives. Each of the three policy areas supported by the proposed credit is closely linked to investment projects already under implementation or under preparation.

Table 4: Current Portfolio of Bank Supported Projects in Niger

Projects related to growth and private sector developmentCompetitiveness and Growth Support Project (under preparation)Kandadji Growth Pole Project (under preparation)Skills for Economic Growth Project (under preparation)Projects related to agriculture and rural developmentNiger Agro-Pastoral Export and Market Development ProjectSecond Emergency Food Security Support Project West African Agricultural Productivity ProjectProjects related to public financial managementNiger Reform Management and TANiger: Extractive Industries Transparency Initiative ImplementationOther Projects NIGER - Niger EFA-FTI Basic Education ProjectInstit. Strengthening & Health Sector Support Program (ISHSSP)Multi-Sector Demographic ProjectHIV/AIDS Support Project 2 Integrated Ecosystems Management in Niger (APL phase 2)Community Action Program (PAC2)Niger Basin Water Resources Development and Sustainable Ecosystems Management ProjectUrban Water and Sanitation ProjectNiger Safety Net Project Community Action Project for Climate Resilience

78. The proposed series supports selected reforms of the business environment. An investment project to assist the Government with the implementation of the reform agenda is expected to be presented to the Board concurrently with SGC-1. The project will focus on improvements in the investment climate, support the development of value chains for extractive industries and the meat and butchery industries, and help develop strengthen trade linkages with Nigeria with a focus on the Kano – Katsina – Maradi corridor. There is also close collaboration with IFC to draw on and reinforce there their transaction and technical assistance based work.

79. The Kandadji growth pole project which is currently being prepared will include the construction of a dam across the Niger and a power station. The project promises to have far-reaching development impacts through improvements in the electricity supply, irrigation, water supply, and riverine ecosystems. To ensure that the project delivers its full benefits, this operation supports necessary improvements in the policy and institutional frameworks for the power and irrigation sectors.

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80. Reforms of the technical and vocational education and training system supported by this operation aim at removing key policy bottlenecks that would ensure that the support provided through a skills for economic growth project leads indeed to the expected results.

81. Agriculture and livestock sector reforms are integrated with a range of rural development operations already under implementation or under preparation. In particular, targeted reforms of the livestock sector and irrigation are also supported by the Agro-Pastoral Export Promotion and Irrigation Project. There are also close linkages to the Regional West- African Agricultural Productivity Project. The proposed DPO would support the set up of the institutional framework for demand driven technology generation, dissemination, and adoption.

82. Finally, reforms targeted by the public expenditure and financial management component of the credit are supported by a technical assistance project for financial management reform. Furthermore, a government led annual public expenditure review process is currently being established that would provide the framework for an intensified dialogue, analysis, and monitoring of public expenditure and financial management issues.

V. THE PROPOSED SGC-1

A. OPERATION DESCRIPTION

83. The proposed SGC-1 of SDR 32.3 million (US$50 million equivalent) is a one-tranche Development Policy Operation and the first in a proposed series of three budget support operations. The primary objective of this series is to support reforms that would help improve the business environment for investment and trade, increase agricultural productivity, and strengthen public financial management. This in turn is expected to help achieve government and CAS objectives related to an increase in per capita incomes, increased resilience to external shocks, and increased access to social services and income earning opportunities for the poor in Niger. Box 2 provides an overview of the policy reforms targeted in these three areas of reform.

84. The sequencing of reforms within the proposed series of three operations reflects government priorities and progress in the preparation of reforms. SGC-1 will place relatively more emphasis on public financial management reform, reflecting that the reform agenda is relatively mature. In other areas, work leading to major reform steps is underway with only a limited number of reforms included in SGC-1, but a broadening and deepening reform agenda supported by SGC-2 and SGC-3. Progress in achieving the targeted results of the credit would be monitored using a series of aggregate results indicators (Annex 3).

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Box 2: Overview of Policy Areas and Reforms Targeted by the SGC Series

Policy Area 1: Business environment Strengthening the dialogue between the public and the private sector. Reforming tax administration Updating the investment code Removing obstacles to commerce Creating an appropriate regulatory framework for public-private partnerships Enhancing the financial sustainability of the energy sector Developing a dual apprenticeship system

Policy Area 2: Agriculture and Rural Development Strengthening research and extension services. Improving the institutional framework for irrigation development. Creating an efficient system for value addition in the livestock sector. Enhancing the efficiency of the food security system

Policy Area 3: Efficacy of Public Spending

Strengthening public financial management systems Strengthening public procurement systems

85. A particular focus of the policy dialogue supported by the SGC series will be on three cross cutting issues, that need to be taken into consideration in the Nigerien context to achieve sustainable shared growth, namely

Reducing the risk of conflict and violence; Enhancing women’s opportunities; and Contributing to improved economic governance.

86. Niger’s development has been frequently disrupted by domestic political instability and by spillovers from regional conflict. Consistent with the lessons of the 2011 WDR on conflict, security, and development, the proposed credit series would assist Government with the implementation of reforms that reduce the risk of conflict and violence, including through a focus on job creation through diversification of the economy, and increased transparency and equity in the use of public resources across households, zones, and regions, especially from the mining and petrol sectors.

87. Gender divides are deeply entrenched in the Nigerien society and, as highlighted by the 2012 WDR, not only limit women’s economic opportunities, but also retard overall development. Promoting women is an explicit element of the government program and the policy dialogue supported by the credit will also seek to identify areas to enhance women’s participation in economic activities. Bridging gender divides in the access to social services, especially health and education is of particular importance. The funding provided through this credit will support Government in the implementation of programs that support increased access for women and this would be monitored through the policy and results matrix supported by this credit and be an important element on the dialogue on the efficacy of public spending. The gender dimension will also be an important area of focus in specific areas supported by this credit, including professional and technical training, and access to agricultural extension and irrigation services.

88. As highlighted in the government program and also in the Africa Strategy, good governance is the foundation of successful development. The proposed credit series would

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support improvements in governance through its focus on increased efficacy and transparency of public spending and the reform of institutions in the agriculture and infrastructure sector.

B. POLICY AREAS AND CROSS CUTTING ISSUES

Policy Area 1: Improving the business environment

89. The private sector in Niger is mostly composed of micro and small enterprises. It is estimated that about 40 percent of Niger’s economic activity takes place in the informal sector.12 According to the statistical office, there are only about 8,700 registered businesses in Niger.13

90. Private sector development is hampered by a difficult investment climate and poor infrastructure. The most recent investment climate assessment14 (Figure 4) identifies poor infrastructure, slow government procedures, corruption, limited access to credit, taxation, and low labor productivity as factors that have a negative impact on initial investment decisions. Taxation, the quality of infrastructure, competition from the informal sector, the cost of communication and energy, and access to finance are identified as the main factors that have a negative impact on the returns on investments already in place. The 2006 Investment Climate Assessment (ICA) also highlighted serious challenges in Niger’s business environment. Tax and tax administration, access to finance, informal sector practices, and corruption were highlighted as the main impediments to business activity (Table 5).

Figure 4: Factors with Largest Negative Impact on Initial Investment Decisions (negative or very negative as % of total replies)

Source: BCEAO/DFI/BEAC/GoN(MEF). 2010.

12 Schneider F., A. Buehn, and C. E. Montenegro. 2010. Shadow Economies All Over the World New Estimates for 162 Countries from 1999 to 2007. World Bank Policy Research Paper No. 5356. July 2010. 13 About 22,000 businesses are registered with the tax authorities, but preliminary findings of a review of the tax base suggests that many of these are inactive. 14 BCEAO/DFI/BEAC/GoN(MEF). 2010. Rapport des enquêtes sur la perception du climat des affaires et les actifs et passives étrangers au Niger. Novembre 2010.

0% 10% 20% 30% 40% 50% 60% 70%

Access to short term credit

Access to long term credit

Customs  incentives

Corruption

Tax incentives

Labor productivity

Quality of infrastructure

Efficency of government

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Table 5: Major or Very Severe Constraints to Firms’ Growth

NB: Exclusively for firms in manufacturing Source: World Bank. 2006. Summary of Niger: Investment Climate Assessment. 91. The 2012 Doing Business report ranks Niger as one of the countries in which it is most difficult to engage in private sector activities – 173th out of 183 countries. Although Niger’s overall ranking has changed little over the last few years, the newly introduced measure “distance to the frontier”15 shows that in recent years Niger has made significant progress to reduce the gap to the best performers in some areas – including starting a business, dealing with construction permits, getting credit, and resolving insolvency. Other areas such as paying taxes, enforcing contracts, protecting investors, and trading across borders show virtually no improvements over the past six years.

Figure 5: How Far Has Niger Come in Areas Measured by Doing Business? Distance to Frontier, 2005 and 2011

Source: The World Bank. 2011. Doing Business 2012 – Economy Profile: Niger

15 This measure shows the distance of each economy to the “frontier,” a synthetic measure based on the most efficient practice or highest score observed for each Doing Business indicator across all economies and years included in the Doing Business sample since 2005.

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92. The SGC series will support selective priority reforms to improve the business environment. SGC-1 focuses on enhancing collaboration between the public and the private sector through the establishment of a mechanism for improved dialogue between the public and the private sector and the adoption of a legal framework for public-private partnerships. SGC-2 and SGC-3 would support the deepening of the reform agenda through the development and implementation of an action plan to improve the business environment as well as support for specific reforms related to the tax administration, domestic and international trade, a new investment code, the energy sector, and skills development.

Strengthening the dialogue between the public and the private sector.

93. A regular and transparent dialogue between Government and the private sector is an important instrument to identify constraints to private sector development, to find solutions, and to monitor their implementation. In 2007, Niger established the National Council for Private Investors (CNIP) as the main platform for such a dialogue. It is chaired by the Prime Minister and includes government and private sector representatives. Its objectives include the following

Advise and assist the Government in the development of the private sector;

Identify legal and regulatory obstacles and other constraints to enterprise development and their competitiveness; and

Create and maintain a consultative process between the Government and the private sector to remove obstacles to trade and investment and to create a facilitating environment for investment and growth.

94. After its establishment in 2007 and some encouraging work in the beginning, the CNIP has not been operational. The main reason why the CNIP has become dormant was that it was not institutionalized and relied mostly on one champion (the former Prime Minister) who then left office. While the CNIP was considered by private sector representatives to be an effective tool for fostering public private dialog, they also thought that it lacked capacity to follow up from policy decisions made to implementation, i.e., for resolving business constraints.

95. The new Government has relaunched the CNIP as an important tool to advance private sector development and to engage in a regular, well structured dialogue with economic operators in Niger (SGC-1 prior action). The old structure has been repealed and a new one created by Government decree. The new CNIP is built around key stakeholders (private sector, Government and CSOs). The first meeting of the CNIP chaired by the Prime Minister took place on April 28, 2012, focusing on reforms of the business environment. It is expected that the CNIP will meet on a quarterly basis. The work of the CNIP is supported by a Permanent Consultation Committee consisting of representatives of the Ministry of Trade and the Chamber of Commerce, which meets monthly and is responsible for the preparation of meetings of the CNIP.

Creating an appropriate regulatory framework for public-private partnerships

96. Niger’s infrastructure financing needs exceed by far available government and donor resources. Government is thus keen to facilitate private sector participation in infrastructure. In September 2011, the Government issued an ordinance that sets out the general framework for public-private partnerships (SGC-1 prior action). Subsequently, in November 2011 the Council of Ministers adopted a decree that establishes the minimum clauses enabling the Government to simplify procedures for public-private partnership

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contracts. It permits the development of new forms of contracts between persons of public law and private parties responsible for a public service for the design, production, processing, operation, and financing of public facilities, as well as management services, or a combination of these. At the same time, Government also established a PPP unit in the Prime Minister’s Office to support the technical ministries and public administration in the development, negotiation, and monitoring of public-private partnerships. The adoption of the new regulatory framework for PPPs provides the basis for the development of projects that can be taken to the market. Building up the capacity of the new PPP unit will be essential to the successful realization of PPP projects.

Reforming tax administration

97. Strengthening tax and customs administration is a priority of the new Government in order to restore its “fiscal monopoly,” highlighted both in the President’s inaugural speech and in the Declaration of Government Policy. The primary objective of these reforms is to increase fiscal resources for the implementation of the government program, but creating a more equitable tax system that ensures a level playing field for all economic actors, enhancing the efficiency of the system, and reducing the transaction cost for businesses are also important objectives and supported by concrete measures contained in the action plans of the tax and the customs departments. The action plan of the Tax Department lays out a program to (a) control the tax base; (b) pursue and consolidate reforms of fiscal legislation; (c) enhance tax compliance; and (d) increase the efficiency of the tax system.

98. Significant progress has already been achieved to date, reflected in an increase in the revenue to GDP ratios by an estimated 1.3 percentage points of GDP in 2011. This is primarily the result of tightened tax and customs administration and the reduction of tax leakages. Among the immediate measures adopted by the new Government was the recruitment of more than 100 tax inspectors, the strengthening of collaboration between the customs and the tax department, and the acquisition of modern equipment by the customs department. A new General Tax Code has been submitted to the National Assembly in 2011 which consolidates reforms of the tax regime that took place in recent years and further enhances the transparency of the tax regime.

99. Reforms to enhance revenue collection need to go hand in hand with reforms that enhance the fairness and transparency of the tax system in order to create a conducive environment for private sector activities. According to data from enterprise surveys, the administrative burden and demands for illicit payments are fewer in Niger than in many other Sub-Saharan African countries.16 The authorities are pursuing reforms to ensure more equitable treatment of tax payers and to further reduce the administrative burden. Of particular concern is the lack of a systematized approach to tax inspections. Enterprises are often subject to multiple tax inspections, either from different departments of the tax authorities that are in charge of different taxes, or repeat inspections made necessary by incomplete information provided by the tax payer, as well as a multiplicity of other inspections by customs, social security etc. This approach involves significant transaction

16 Results from the 2009 enterprise survey suggest that the average number of meetings with tax officials per year (1.6) is significantly below the average for sub-Saharan Africa (2.8) and for low income countries (2.5). The same survey also suggests that the share of firms expected to give gifts in meetings with tax inspectors (13.7) is also below the average for sub-Saharan Africa (18.3) and for low income countries (26.6).

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cost for businesses and the tax authorities and also creates opportunities for illicit payments. The tax authorities have already started to implement measures to streamline the tax inspection process. However, to further rationalize tax inspections, Government intends to adopt and implement a strategy for tax inspections that would reduce multiple firm visits and establish a coherent procedure for the selection of cases that will be examined.

Updating the investment code

100. In order to improve Niger’s attractiveness for investors and take account of developments in the economic environment, Government started the preparation of a new investment code in 2008. However, finalization and adoption of the new investment code has been delayed due to the political developments in recent years, but also as the authorities are waiting for new WAMEU directives on investment codes. It is now anticipated that the new investment code will be finalized and adopted in 2012. The new investment code is expected to increase investment in the non-mining sector and contribute to continued investment in the mining sector, even though the volume of investment in the mining sector is projected to decline as the large scale projects in the uranium and petrol sector will be completed in the next few years.

Development and implementation of an action plan for the improvement of the business environment.

101. Drawing on technical assistance from the IFC in identifying measures that would allow Niger to improve the business environment, the Government has established nine working groups to develop an action plan for the improvement of the business environment. The working groups are organized around the dimensions of the “Doing Business” assessment. The action plan is expected to be developed in the course of 2012.

Removing obstacles to commerce

102. Being a landlocked country with inadequate infrastructure links and more than 1000 km away from the closest seaport, transport cost and time for international trade are high in Niger, as documented in the Doing Business statistics. However, the geographical disadvantage is further accentuated by excessive administrative burdens for both domestic and international commerce. Doing business statistics indicate that the number of documents to export (8) and the number of documents to import (10) is above the regional average for Sub-Saharan Africa (7.7 and 8.7 respectively.) Preparation of these documents takes on average 36 days and costs US$665. A relative large number of required documents does not only add to transaction costs, but it also creates more opportunities for soliciting illicit payments.17 A particular bottleneck in the preparation of export and import documents is the registration of foreign exchange transactions with the Ministry of Finance, even though foreign exchange transactions are liberalized in Niger. Government intends to resolve this bottleneck in the course of 2012 by adopting measures that would eliminate delays with respect to the registration of foreign exchange transactions. Further measures to reduce the number, time, and cost of export and import documents are expected to be identified in 2012 and implemented in 2013.

103. Furthermore, domestic and international trade suffers from frequent road barriers which not only slow down transport, but often are also used to solicit illicit payments from freight carriers, which adds to the cost and time of transport. The 17 Research highlights the positive relationship between the number of documents, the time to complete all procedures to trade, and the volume of trade, which tends to be more pronounced for large and poor countries (e.g., Djankov et al. (2010) and Amin (2011)).

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ECOWAS observatory for abnormal practices estimates that on the onion trade route that runs from Madaoua in the west of Niger to Bittou in Burkina Faso there are about three control posts that require about FCFA 20,890 (about US$40) in illicit payments and cause delays of about six minutes per 100 km. Out of 16 road blocks on the route, ten are by customs, four by police, and two by the gendarmerie. To address the issue of excessive road blocks, the Ministry of Commerce has been charged with the preparation of a plan to reduce the unnecessary burdens created by excessive controls and road blocks. It is envisaged that Government will issue regulations that specify the type and locations of official road blocks and controls and a complaints mechanism to deal with abusive practices.

Enhancing the efficiency in the energy sector

104. The investment climate assessment for Niger identifies unreliable access to electricity with frequent power outages as the primary infrastructure constraint that businesses face in Niger. The cost arising from unreliable energy is estimated at around 6 percent of manufacturing firms turn-over. Access to electricity is also one of the lowest in sub-Saharan Africa, with only 8 percent of the population having access to electricity, compared to an average of 15 percent for sub-Saharan Africa. This constrains significantly growth of non-agricultural economic activities, especially outside the major urban agglomerations.

105. Of Niger’s 2011 electricity consumption of 701.6 million KWh, only about 94 million KWh are generated in Niger, with the remainder imported, primarily from Nigeria. One third of the domestic production is taking place in the north of the country to serve the mining industry, using Niger’s rich coal deposits. The remaining portion of the domestic production is based on expensive diesel fuel. However, Niger controls significant energy potential, including for hydro energy from the Niger River, from the oil fields which started production in 2011, and from solar energy, the potential of which is estimated at 4.3 billion MWh/year. In an effort to reduce import dependence from Nigeria, Niger is planning to scale up domestic generating capacity, including a thermal power station to serve Niamey with a capacity of 100 MW, and a 200 MW coal fired power station that would use the Salkadamna coal deposits. The construction of the Kandadji dam across the Niger river close to the border with Burkina Faso which started in 2011 is scheduled to add a capacity of 130 MW.

106. The government owned NIGELEC power company is responsible for power generation, transmission, and distribution and operates four power plants. Its financial situation is precarious and it often has to rely on short term bank credit to bridge liquidity gaps. Cheap electricity imports from Nigeria (16.5 FCFA/KWh) have kept electricity prices low in Niger. NIGELEC’s 2010 balance sheet shows a net profit of 1.17 billion FCFA after tax. However, the financial statement analysis shows an unbalanced financial structure due to: (i) an absence of tariff adjustment since 1994; (ii) substantial increase of fuel costs paid in cash; and (iii) continuous degradation of performance (network overload, losses, revenue collection, etc) due to sufficient investment in infrastructure. Actually, 2010 marks a turning point for the low cost of imported energy, which can no longer compensate the high cost of the increasing share of local based diesel generation unit. Currently, the difference between the average sale price and the average cost price is only 0.6 FCFA per KWh. However, as the average cost of domestic generation is 181 FCFA/KWh compared to an average sale price of 80.7FCFA, there is a gap of 100.3 FCFA/KWh for electricity generated domestically with diesel units.

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107. Ensuring NIGELEC’s financial viability is essential for the development of the energy sector. Government is thus planning to adopt an action plan for the (i) restructuring and recovery of NIGELEC and (ii) tariff reforms. Preparation of the action plan would involve an operational and financial audit of NIGELEC, preparation of a financial model, and a tariff study in 2013, for which consultants will be recruited in 2012. Adoption of the action plan in 2013 and its subsequent implementation will be monitored under the SGC series as critical steps in the sustainable development of the energy sector. A key element of the financial rehabilitation of NIGELEC would also be the resolution of government arrears to NIGELEC and the timely payment of electricity bills by the public sector. At the same time, NIGELEC has outstanding liabilities to Government which would also need to be settled. As this problem exists also in utilities in the water sector and elsewhere, Government intends to draw up an inventory of these liabilities and establish a plan for their resolution, including measures that would prevent the reaccumulation of such arrears.

108. In order to guide the future development of the power sector, the authorities envisage the preparation of an energy sector master plan that would cover generation, transmission, and distribution with a view to expanding and diversifying Niger’s energy sources, with a focus on public-private partnership, and a strategy for rural electrification. It is envisaged that a study for the energy master plan would be carried out in 2013 and a Master Plan adopted in 2014.

Developing a dual apprenticeship system

109. A range of assessments identify inadequate skills as a key constraint for economic growth and private sector development. At the same time, strengthened education and skills development are essential factors in providing access to better and more remunerative employment and thus reducing poverty. Results from the latest household budget survey show that people able to read have more than double the hourly income than those not able to read. Hourly incomes of persons with professional and technical training are more than five time those of people with only secondary education. Bank’s budget support targets reforms of technical and vocational training that will also be supported by a Bank funded investment project currently under preparation. This complements the focus of the EU budget support on basic education.

110. With the support of the Bank, the Government is currently preparing a program to strengthen the link between the education system and the demands of the economy. This program will focus, inter alia, on the strengthening of Niger’s TVET and apprenticeship system. The SGC series will accompany this program with a focus on measures to further develop a dual apprenticeship system. Such a dual apprenticeship system combines firm based training with classroom based training. The Government of Niger has already piloted such a system in the public sector and intends now to expand it to the private sector. The next step in this process would be the development and adoption of a legal framework for the dual apprenticeship system, followed by the adoption of implementation regulations, including the development of framework contracts and of incentives for firms who offer such apprenticeships. For this purpose, Government intends to establish a coordination mechanism among concerned ministries, including the ministries of finance, commerce, and professional training and employment as well as the Prime Minister’s office and representatives of employer organizations.

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SGC-1 Prior Actions:

The Recipient has issued a decree to modify the rules governing the National Private Investor Council and convened and held a first meeting of the National Private Investor Council’s members since 2007.

The Recipient has adopted a regulatory framework for public-private partnerships which facilitates and creates greater flexibility for public-private collaboration, and includes the general regime for public-private partnership contracts with the regulations for its application and the establishment of a public-private partnership support unit.

SGC-2 Triggers:

The Recipient adopts and implements a strategy for tax inspections that would reduce multiple firm visits and of a coherent procedure for the selection of cases that will be examined.

The Recipient adopts measures that would eliminate delays with respect to the registration of foreign exchange transactions for imports.

The Recipient adopts an action plan for the improvement of Niger’s business environment. The Recipient issues regulations concerning road blocks and controls, which define the type

of controls, location of road blocks, and recourse mechanisms in order to minimize the risk of abusive practices for merchandise transport in Niger.

The Recipient submits to the National Assembly a legal framework for dual apprenticeships.

Expected Results

111. The overall targeted outcomes include an increase in non-mining, non-agricultural GDP growth, trade and investment. Specific results include an increase in the number of public private partnerships and an increased participation of the private sector in infrastructure development, a reduction in the number, time, and cost of documents required for exports and imports, and a reduction in transport cost and time. While the immediate impact of the energy reforms is to ensure the financial sustainability of NIGELEC, this in turn is expected to foster greater investment in the energy sector and thus enhance the availability of power. The reform of the dual apprenticeship system is expected to foster an increase in the number of students that benefit from company based training opportunities that combine practical and theoretical training.

Policy Area 2: Agriculture and Rural Development

112. With about 80 percent of the population living in rural areas and the majority of them living under the poverty line, rural development is central to poverty reduction efforts. The rural sector contributes about 43 percent of GDP, with agriculture accounting for about 60 percent and livestock for about 29 percent of rural output. The majority of the rural population pursues subsistence farming and animal husbandry using low-productivity and traditional techniques. With increasing concentration of population in the most productive zones, the sustainable management of natural resources has become a major challenge.

113. Agricultural and livestock sector production suffers from low productivity and high volatility. Recent analyses identify the following as the main factors contributing to the poor performance of the sector: (i) frequent droughts, pest invasions, and irregular rainfall patterns; (ii) inadequate research and extension services which limits the dissemination and adoption of improved and climate resilient technologies; (iii) scarce and fragile water resources, with insufficient financing from Government and donors for irrigation

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development; (iv) difficult conditions for the commercialization of agricultural products, both within Niger and across borders, including poor transport services, inadequate marketing infrastructure and related services, road blocks by customs and police agents, and the lack of implementation of regional movement of goods and people; and (v) limited access to financial services, which also constrains the modernization of production systems and commercialization.

114. Managing agriculture related risk and improving agricultural productivity and food security are among the top priorities of the new Government. It has developed in a participative process a new flagship program ‘Nigeriens nourish Nigeriens – 3N’ which replaces the previous strategy for rural development. This program comprises five pillars focusing on (i) increase and diversification of agro-pastoral and fisheries production, (ii) regular supply of rural and urban markets with agricultural and food products, (iii) enhanced resilience of the population to climate change crises and catastrophes, (iv) enhancement of the nutritional status of Nigeriens, and (v) promotion and coordination of the 3N initiative and the launching of reforms. The initiative is led by a High Commissioner but its implementation takes place through existing structures.

115. The SGC series will support the implementation of the 3N initiative with a focus on removing key policy constraints to the development of the agriculture and livestock sector and food security, including the reform of the research system, irrigation development, commercialization of the livestock sector, and reform of key elements of the food security system. Reforms monitored under the SGC series are closely aligned with the Bank’s investment support in the context of the West African Agricultural Productivity Project (WAAPP) and the Project for the Development of Agricultural Exports (PRODEX).

Strengthening research and extension services

116. Limited access to new technologies and slow adoption of existing technologies keep productivity in the agriculture sector low. In order to strengthen research and extension services, Niger needs to reform its policies and institutions for the generation, dissemination and adoption of agricultural technologies. Such reforms would need to transform the current top-down, uniform, and under-financed approach to a demand driven approach with significant private sector participation. Under GPRC-2, Government has adopted an integrated framework for extension services for rural development that reflects these concerns.

117. The 3N initiative envisages the development of a demand driven research system in support of the key pillars of the initiative. Niger’s agricultural research system consists of the National Institute for Agronomic Research, the Center for Livestock Breeding and four higher education institutes involved in agricultural research and development. Following the closure of a Bank supported agricultural research project in 1998, spending on agricultural research dropped significantly and performance of agricultural research in Niger declined. To revive agricultural research, the authorities launched in 2009 the National Council for Agronomic Research (CNRA), but the political crises in 2009 and 2010 delayed its operationalization. It is charged with the development of an agricultural research policy and the monitoring of its implementation. Its establishment is expected to lead to more sustainable funding of agricultural research and development and a higher priority for the recruitment and training of agricultural research staff. In early 2012, the Government has made the executive secretariat of the CNRA operational (SGC-1 prior action). This includes the appointment of an executive secretary and key staff as well as a budget allocation of FCFA

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245 million in the 2012 budget. A location for new premises for the executive secretariat has also been identified and is currently being negotiated.

118. The executive secretariat would develop and administer the national competitive grant schemes, which are a key mechanism towards a better performing and demand driven research system and a stronger link between research and extension. Competitive Agricultural Research Grant Schemes (CARGS) typically entail nationwide contests, inviting a wide range of potential service providers to submit proposals for technical review. Proposals are selected for financing according to transparent procedures and rigorous criteria. The aim is to bring greater contestability and increased efficiency to bear on agricultural knowledge creation. CARGS complement traditional "block" funding allocated annually to specified public research organizations for their core research programs.

Improving the institutional framework for irrigation development

119. Scaled up investment in irrigated agriculture is one of the main focus areas of the 3N initiative to increase agricultural production and to reduce vulnerability to inadequate rain fall patterns. Unfortunately, irrigation development is hampered by the lack of a clear definition of the role of public institutions, weak management of the National Irrigation Office (ONAHA), an obsolete framework for the management of irrigation infrastructure financed by Government, and the lack of private investment and access to finance.

120. Among the key measures to improve the institutional and policy framework for irrigation are the following: (i) preparation, adoption and implementation of an action plan for the restructuring of ONAHA; and (ii) a revision of the texts and transfer contracts for irrigation infrastructure to ensure sound and sustainable management of operation and maintenance by cooperatives.

Creating an efficient system for value addition in the livestock sector.

121. The livestock sector accounts for about 29 percent of agriculture sector GDP and contributes about 25 percent of non-mining sector exports. Most of the livestock exports are to Nigeria on hoof. However, livestock producers face a range of constraints that hinder the commercialization of livestock production. At present, Niger’s capacity to process meat for export is limited, as most of the butchery activities take place in the informal sector and public slaughterhouses are poorly maintained. With the support of the Bank’s investment project to support competitiveness and growth, Government intends to rehabilitate existing slaughterhouses and upgrade their management structure and practices, with consideration of private sector participation. The lack of adequate sanitary standards for meat production is another constraint to exports. Government intends thus to develop and adopt a new policy on sanitary standards for meat products.

Enhancing the efficiency of the food security system

122. A critical element of Niger’s food security system is the strategic grain reserve managed by the Nigerien Food Office (OPVN). The strategic grain reserve is used to manage domestic food prices through grain purchases and sales and provides support in periods of heightened food insecurity through the sale of subsidized grains. Operations of the OPVN are supported from the Government’s own resources as well as by donor resources. The recent audit by the Court of Accounts identifies significant weaknesses in the management of the OPVN and recommends a fundamental restructuring in order to allow it to fully accomplish its mission. The authorities have launched a process to identify the best way of how to address the weaknesses identified by the Court of Accounts. A Bank supported

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review of Niger’s systems for managing risks to agricultural production and food security is expected to provide further suggestions on how the role of OPVN can be strengthened. Based on this work, the SGC series would monitor progress in reforms of the OPVN to ensure that it plays its central role in an economically efficient and transparent way.

SGC-1 Prior Action:

The Recipient has made the Executive Secretariat of the National Council for Agricultural Research operational through the recruitment of an executive secretary, deputy executive secretary, an accountant, a monitoring and evaluation specialist and support staff, and the provision of adequate funding.

SGC-2 Triggers

The Recipient develops and adopts a restructuring plan of the National Irrigation Office (ONAHA), taking into account the objectives of the 3N initiative.

The Recipient strengthens the link between research and extension services through the establishment of mechanisms based on competitive financing of agricultural research and the adaptation of technology.

Expected Results

123. The reforms of research and extension services are expected to lead to an increase in agricultural productivity through the adoption of improved and climate resilient technologies. The monitorable results indicator is the number of producers who have adopted improved technologies made available by the research system. Starting from 0, the number is expected to increase from 1,800 after the first year to 30,000 after the second and 90,000 after the third year. This indicator would be monitored through annual assessment surveys under the WAAP. Reforms of the ONAHA are also expected to lead to an increase in the productivity of irrigated areas, from currently about 4.5t/ha to 6t/ha by 2014.

Policy Area 3: Enhancing the efficacy of public spending

124. Public expenditures are the main tool for the implementation of Niger’s PRSP. Public expenditure policies that align public expenditures with key policy objectives, public expenditure management systems that ensure the efficient implementation of public expenditure policies, and a public procurement systems that ensures value for money are thus of central importance.

Strengthening public expenditure policies for better alignment of the budget with the PRSP

125. The SGC series will monitor that both the budget estimates as well as budget execution are consistent with Niger’s PRSP. Government’s approach to align the budget with the PRSP contains several elements. The PRSP identifies priority sectors18 which have a direct impact on the achievement of PRSP outcomes. At a second, more detailed level, pro-poor expenditure items have been identified as part of the PRSP process. Priority sectors and pro-poor expenditures receive priority during budget preparation and execution. In order to further enhance the alignment between the budget and the PRSP, the Government has also been employing the Medium Term Expenditure Framework (MTEF) approach at the central and at the sectoral level. However, to date, this approach has not been applied consistently. 18 Priority sectors include the Ministry of Secondary and Higher Education and Scientific Research, the Ministry of professional training and alphabetization, the Ministry of Transport, Tourism, and Handicrafts, the Ministry of Agriculture and Livestock, the Ministry of Works, the Ministry of National Education, the Ministry of Water, Environment, and the Fight against Desertification, the Ministry of Public Health, and the Ministry of Population, Promotion of Women, and the Protection of Children.

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In particular, sectoral MTEFs in education, health, and rural development have been typically prepared without reference to a cross sectoral framework. Going forward, the Government is committed to institutionalize an MTEF approach where sectoral MTEFs are prepared on the basis of a cross sectoral MTEF. Related training and capacity building is being provided by the IMF, the World Bank, and other donors.

126. The Government’s ambitious program for scaling up social expenditures, especially on education, maternal health care, and water, is reflected in a significant increase in the share of pro-poor expenditures in the 2012 budget, which amount to FCFA 343 billion (34 percent of total expenditures). Preliminary data for 2011 indicate that FCFA 171 billion (22 percent of total expenditures) were allocated to pro-poor expenditure items, of which FCFA 128 billion were actually executed. The relatively low budget execution rate for pro-poor expenditures of 75 percent is similar to the overall budget execution rate, but hides important differences in budget execution rates among spending ministries. In particular, the execution rate of the ministries of education and health was above 90 percent in 2011. However, further efforts to increase budget execution of PRSP related expenditures are needed, including the streamlining of the budget execution process, timely budget releases, and better protection of pro-poor expenditures in the course of budget execution. As Government is preparing its new PRSP (Plan for Economic and Social Development), it will also be important to review the list of pro-poor expenditures. The 2012 PER will review in detail the current system in place to align the budget and its execution with PRSP priorities.

127. The budget is also an important instrument for promoting gender related issues and policies. The Government’s intention to introduce universal schooling until the age of 16 will have a significant impact on the position of women. Not only does it promise to close the gender gap that currently widens as children advance through the school system, but it would also have a range of desirable impacts such as increasing the average age of marriage and delaying the age of the first child birth and thus reducing also the related health risks. Other gender related priorities that need to be reflected in the budget and will be monitored under the SGC series include expenditures targeted at maternal health, assisted birth, and contraceptive use which form part of the harmonized policy matrix underlying this credit series. Government is also pursuing initiatives on gender sensitive analysis led by the Ministry for Population, the Promotion of Women, and the Protection of Children. In the context of the PER process it will be explored how such initiatives can be mainstreamed and eventually supported by the SGC series.

Strengthening public financial management systems

128. The government strategy identifies strengthening of PFM as a key element of the governance agenda. In 2008/09 the Bank prepared in collaboration with Government and other donors a second PEMFAR which identifies five key challenges that need to be addressed:

Eliminate the excessive use of exceptional spending procedures which poses serious issues of governance and hinders effectiveness of public expenditure;

Ensure timely, comprehensive, and accurate fiscal accounting and reporting;

Improve budget comprehensiveness and transparency;

Make operational the new Treasury structures and improve cash management; and

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Strengthen internal control and increase external oversight of budget outcomes, including by making operational the Court of Accounts.

129. Government efforts to address these weaknesses include the following reforms that were carried out over the past 18 months: the restructuring of the Treasury, the establishment of the Court of Accounts who published its first report in April 2012, covering 2010-2011 activities, the preparation of a cross-sectoral MTEF and sectoral MTEFs, the audit and accelerated payment of arrears, and decentralization of data entry on expenditure commitments to the spending ministries.

130. Building upon this progress, the new Government adopted in December 2011 a comprehensive PFM action plan for 2011-2014. This action plan identifies reforms to be carried out in nine areas: i) reviewing the legal framework and transposing the new WAEMU directives adopted in June 2009; ii) improving revenue collection; iii) reinforcing budget preparation and streamlining its execution; iv) strengthening budget execution, v) strengthening accounting and financial reporting; vi) strengthening information systems, vii) reinforcing oversight and transparency; viii) improving cash and debt management; and ix) modernizing procurement. Progress in the implementation of this action plan provides a foundation for the provision of budget support by the Bank and other budget support donors.

131. WEAMU directives on public financial management also provide a framework for significant reform in this area. In 2009, the WAMEU adopted a set of six directives to modernize the legal framework for public financial management in member countries. These cover fiscal transparency, the preparation of annual budgets, accounting regulations, budget classification, the chart of accounts, and the fiscal summary table. As a first step to their implementation in Niger, a new Public Financial Management framework law was prepared and approved by the National Assembly in March 2012 (SGC-1 prior action.) Government plans to transpose the directives on fiscal transparency, budget nomenclature, government accounting and the chart of accounts into national law during 2012. A decree concerning the preparation of the Finance Law in conformity with these WAEMU directives is expected to be issued during 2013.

132. Policy dialogue in the context of the SGC series will focus on two major constraints to a sound public financial management in Niger: (i) discretionary budget execution and weak financial reporting; and (ii) insufficient internal control and oversight to prevent misuse of public resources. These two areas of reforms are pre-conditions for Niger to move forward in implementing the new WAEMU directives, which set an ambitious reform path toward MTEF, program budgeting, devolution of budget authority to line ministries and accrual accounting. However, before moving to these second generation reforms, the Government needs to ensure that basic budgeting is well functioning, that budget execution is compliant with all regulations in force and that financial and internal controls are in place. Bank support is complementary to and coordinated with support by the IMF, the EU, and the African Development Bank, whose programs also contain a strong focus on public financial management reforms.

133. Streamlining budget execution is instrumental for the realization of the PRSP objectives and the effective allocation of expenditures to priority sectors. Budget execution is delayed by cumbersome procedures and an insufficient integration of the accounting and the budgeting function of the integrated financial management information system. Without data transfers from the accounting information system to the budget system, budget officers (ordonnateurs) do not receive information regarding expenditure payments,

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preventing them from following the execution of their commitments. This leads also to delays in inputting and processing data and accounts, loss of information, and poor quality data. Government is thus in the process of creating an interface between the computer systems of the Directorate General of the Budget and the Directorate General of the Treasury and Government Accounting to support enhanced budget execution.

134. Reinforcing financial reporting should mitigate the risks of corruption and misuse of public resources. As pointed out in the first report of the Court of Accounts, the Tax accountants (receveurs des impôts) and Customs Accountants (receveurs des douanes) are neither under the authority of the Treasury and Accounting department nor under the jurisdiction of the Court of Accounts. Revenue collection carried out by these accountants are therefore not properly justified and documented and the Accountant General is unable to produce government general accounts compliant with the legal provisions on public resources management. The Minister of Finance has thus nominated at the tax and customs department special accountants (“receveurs”) within the accountant network of the Treasury to ensure that Customs and Tax accounting are properly integrated into the Treasury system, follow accepted Treasury accounting standards, and meet the Court of Accounts requirements for tax and customs accounts (SGC-1 prior action).

135. Strengthening internal control would help to prevent fraud in procurement. In June 2011, a major fraud relating to payment orders based on false invoices committed at the end of the transition period was discovered, leading to the suspension and imprisonment of top level government officials in the Ministry of Finance. This scam revealed a lack of control over the delivery of goods, works and services. To address this weakness, the Ministry of Finance is strengthening oversight by the Department for Financial Control (GDFC) and by the General Inspectorate of Public Finances (GIPF) through a focus on material results in the priority sectors and regular and detailed reports. In early 2012, the GDFC carried out physical inspections of the execution of 241 public procurement contracts of an individual value of more than FCFA 20,000,000 (and thus subject to competitive bidding) awarded in 2011 in order to ensure value for money in public procurement (SGC-1 prior action). A report on these inspections was issued in April 2012 and highlights a number of weaknesses and proposes measures to enhance value for money in public procurement. Identified weaknesses include the non-adherence to the technical specifications, the non-utilization of infrastructures and goods procured, weak inventory accounting, and poor quality of some infrastructures. The report also identifies weaknesses in government stores of the ministries of finance, health, and education. The report recommends measures to strengthen the capacity of budget managers and to improve physical asset management as well as specific measures to improve the functioning of government stores of the ministries of finance, health and education.

136. Reinforcing Government oversight on state-owned enterprises (SOEs) would also enhance the transparency of public financial management. SOEs receive government subsidies and play a major role in Niger’s development in the areas of energy (NIGELEC), urban transportation (SONUTRI), telecommunication (SONITEL), Postal Service (Niger Poste), management of mining and water resources (SOPAMIN and SPEN) and fuels (SONIDEP). The first report of the Court of Accounts reviewed the accounts of several of these SOEs (SONIDEP, NIGELEC, OPVN and SOPAMIN) and found significant shortcomings in their financial management. This is partly the result of weak government oversight, especially within the Ministry of Finance which has very limited leverage to influence these SOEs’ strategies and to control their results and resources. The Ministry of Finance thus intends to create a directorate in charge of the oversight and the management of

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the State portfolio in the above mentioned SOEs and other public firms. Aside from specific measures to address the weaknesses identified by the Court of Accounts, the Ministry of Finance also intends to address the issue of mutual debts and arrears between Government and SOEs and adopt measures that would prevent their recurrence.

Strengthening public procurement systems

137. Procurement reforms constitute a central element of Government’s efforts to enhance the efficacy in the use of public resources. The PEMFAR II contained a detailed review of the strengths and weaknesses of Niger’s procurement system. The main weaknesses of Niger’s public procurement system include the following: frequent use of non-competitive procurement made possible by a threshold that is above the WAEMU threshold; frequent limitation of national competitive bidding to local contractors; and weak internal controls and the absence of procurement audits. The PEMFAR II action plan contains a comprehensive program for strengthening Niger’s public procurement system. Implementation of the WAEMU directives and good practices in procurement is essential to reduce the substantial risk of non-compliance with principles of transparency, competition, and equity. Reforms carried out in recent years include the reform of procurement institutions, with the establishment of the Procurement Regulatory Authority and the Directorate General of Procurement Control.

138. A new procurement code and a public procurement ethics code that are fully aligned with the WAEMU procurement directives have been adopted by the Council of Ministers on December 29, 2011 (SGC-1 prior action). The new procurement code updates and rationalizes the regulatory and institutional framework for public procurement with a focus on free access to public procurement opportunities, more competition, equal treatment of bidders, transparent procedures for procurement awards, and the efficiency of the procurement process. The public procurement ethics code defines standards for ethic and transparent procurement processes which apply to all actors in the preparation, execution, and the oversight of public procurements. Furthermore, the Council of Ministers has also adopted a decree concerning the responsibilities, composition, and functioning of the Public Procurement Regulatory Authority. It reduces the number of members from 15 to between 9 and 12 and strengthens their powers to play a more effective role in the public procurement process and precludes them from being members of procurement commissions.

139. Subsequent to the adoption of these codes, Government needs to issue procurement regulations in a prioritized process. It is envisaged, that regulations covering procurement thresholds, sanctions, and institutional responsibilities will be prepared and issued first, supported by SGC-2. SGC-3 would then support the completion of the reform of the legal and regulatory procurement regime, as all outstanding regulations are expected to be issued before the end of 2013.

140. Regular procurement audits and their publication are a critical to enhance transparency and accountability of the procurement process. Audits for 2007 and 2008 have been completed and the report is available on the website of the ARMP. A summary of the findings has been published in the weekend edition of Le Sahel on May 12, 2012. The audit revealed significant shortcomings in the procurement process, including complete lack (10 percent of audit sample) or incomplete (20 percent of audit sample) files, as well as tenders and contracts that contain incomplete specifications and inadequate minutes of the awards committee. The audit offers a number of recommendations including improving filing systems and institutionalizing awards committees. However, the report also notes that following the audit important reforms of the procurement process have taken place which may

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have addressed some of the weaknesses identified, but that only an audit of recent procurement activities could confirm. Government intends to eliminate the backlog of procurement audits by 2013 by having audits of procurement activities of 2009 and 2010 done in 2012 and audits of procurement activities of 2011 and 2012 done in 2013.

SGC-1 Prior Actions: The Recipient has submitted to its National Assembly a new organic public finance law as

the basis for modernizing the Recipient’s public financial management system in a manner consistent with WAEMU directives.

The Recipient has nominated public accountants in the directorates of its Ministry of Finance responsible for tax and customs, respectively, as special accountants members of the network of Treasury accountants.

The Recipient has carried out physical inspections of the execution of at least two hundred (200) public procurement contracts of an individual value of more than CFAF 20,000,000 (and thus subject to competitive bidding) awarded in 2011 and has issued a report reflecting findings and containing recommendations in order to ensure value for money in public procurement.

The Recipient has issued by decree the new Procurement Code and the Procurement Ethics Code.

The 2007 and 2008 independent audits by the Recipient’s Public Procurement Regulatory Agency have been completed and the Recipient has published: (i) the audit reports on its web site, and (ii) a summary of the auditors’ findings in the Le Sahel newspaper.

SGC-2 Triggers The Recipient transposes the UEOMA directives on fiscal transparency, budget

nomenclature, government accounting, and the chart of accounts into national law. The Recipient’s Ministry of Finance completes the interface between the computer systems

of the Directorate General of the Budget and the Directorate General of the Treasury and Government Accounting to support enhanced budget execution.

The Recipient’s Ministry of Finance creates a directorate to supervise state-owned enterprises.

The Recipient issues implementation regulations for the new procurement code, including on procurement thresholds, sanctions, and institutional responsibilities.

The Recipient’s Public Procurement Regulatory Agency audits 2009 and 2010 procurements and publishes: the audit reports on its web site and a summary in the Le Sahel newspaper.

Expected Results

141. Strengthening of public financial management is expected to contribute to increase efficiency in the use of budgetary resources and reduced leakages. The main indicators to be monitored include the share of pro-poor expenditures in total expenditures, the rate of budget execution for pro-poor expenditures, and the evolution of the PEFA ratings.

142. Procurement reforms are expected to result in a more transparent, competitive, and effective procurement process and thus the more efficient utilization of public resources. A key indicator for the efficiency of the procurement process is the share of contracts that are tendered competitively. Figures published by the ARMP indicate that in 2010, 10.5 percent of the number of public tenders which represented 70.8 percent of the procurement value were subject to international tender. 44.5 percent of the number of public tenders representing 12.5 percent of the procurement value were subject to national tender. It is expected, that procurement reforms would help ensure that most procurements (at least 75

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percent in number and 80 percent invalue) are carried out through competitive national or international bidding.

C. SGC-1 PRIOR ACTIONS AND SGC-2 TRIGGERS

143. All prior actions have been satisfactorily completed as summarized in Table 6.

Table 6: SGC-1 Prior Actions

Policy Area 1 : Business environment (i) The Recipient has issued a decree to modify

the rules governing the National Private Investor Council and convened and held a first meeting of the National Private Investor Council’s members since 2007.

Completed. Decree No. 2011-681/PM/MC/PSP of December 26, 2011 modifies and completes the initial decree establishing the CNIP. The 1st meeting of the CNIP took place on April 28, 2012 focusing on measures to improve the business climate as measured by the Doing Business indicators.

(ii) The Recipient has adopted a regulatory framework for public-private partnerships which facilitates and creates greater flexibility for public-private collaboration, and includes the general regime for public-private partnership contracts with the regulations for its application and the establishment of a public-private partnership support unit.

Completed. The regulatory framework for PPPs was established through Ordinance No 2011-07 of September 16, 2011. Subsequently, the council of ministers approved on November 9, 2011 decrees with implementation regulations and for the establishment of a PPP support unit.

Policy Area 2: Agriculture and Livestock (iii) The Recipient has made the Executive

Secretariat of the National Council for Agricultural Research operational through the recruitment of an executive secretary, deputy executive secretary, an accountant, a monitoring and evaluation specialist and support staff, and the provision of adequate funding.

Completed. The executive secretariat of the CNRA has been established and is operational with an executive secretary and staff. The budget for 2012 contains an adequate allocation of FCFA 245 million for the construction of an office and the procurement of equipment, and the running of the CNRA.

Policy Area 3: Efficacy of Public Spending (iv) The Recipient has submitted to its National

Assembly a new organic public finance law as the basis for modernizing the Recipient’s public financial management system in a manner consistent with WAEMU directives.

Completed. The organic public finance law No. 2012-09 was adopted by the National Assembly and promulgated by the President of Niger on March 26, 2012.

(v) The Recipient has carried out physical inspections of the execution of at least two hundred (200) public procurement contracts of an individual value of more than CFAF 20,000,000 (and thus subject to competitive bidding) awarded in 2011 and has issued a report reflecting findings and containing recommendations in order to ensure value for money in public procurement.

Completed. The recipient carried out physical inspections of 241 contracts. The report was issued in April 2012 and documents the findings and proposes recommendations.

(vi) The Recipient has nominated public accountants in the directorates of its Ministry of Finance responsible for tax and customs, respectively, as special accountants members

Completed. The Minister of Finance nominated special accountants (“receveurs”) at the tax and customs department through decisions no. 183/MF/DGTCP and no.

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of the network of Treasury accountants. 184/MF/DGTCP of May 14, 2012. (vii) The Recipient has issued by decree the new

Procurement Code and the Procurement Ethics Code.

Completed. A new procurement code (Decree No. 2011-686 /PRN/PM of December 29, 2011) and a public procurement ethics code ( Decree No. 2011-688/PRN/PM of December 29, 2011) have been issued.

(viii) The Public Procurement Regulatory Agency audits 2007 and 2008 procurements and publishes : the audit reports on its web site and a summary in the Le Sahel newspaper.

Completed. The audit report was issued in March 2012 and is available on ARMP’s website. A summary of the audit report was published in Le Sahel on May 13, 2012.

144. The decision as to whether IDA will proceed with SGC-2 will be contingent on satisfactory progress in the implementation of the reform program supported by this operation, including the completion of key steps in reforms targeting shared growth and public expenditure efficacy identified as triggers in

145. These triggers would be reviewed jointly with the authorities with the possibility for adjustment in line with evolving government priorities -- especially as a new PRSP is being prepared -- and changes in the economic environment in Niger.

Table 7: Preliminarily Identified Triggers for SGC-2

Policy Area 1: Business environment (i) The Recipient adopts and implements a strategy for tax inspections that would reduce multiple

firm visits as well as a coherent procedure for the selection of cases that will be examined. (ii) The Recipient adopts measures that would eliminate delays with respect to the registration of

foreign exchange transactions for imports. (iii) The Recipient adopts an action plan for the improvement of Niger’s business environment. (iv) The Recipient issues regulations concerning road blocks and controls, which define the type of

controls, location of road blocks, and recourse mechanisms in order to minimize the risk of abusive practices for merchandise transport in Niger.

(v) The Recipient adopts a new investment code. (vi) The Recipient submits to the National Assembly a legal framework for dual apprenticeships. Policy Area 2: Agriculture and Livestock (vii) The Recipient adopts mechanisms for the competitive financing of agricultural research and the

adaptation of technologies to strengthen the link between agricultural research and the needs of producers.

(viii) The Recipient adopts a restructuring plan of the National Irrigation Office (ONAHA) ) which takes into account the perspectives of the implementation of the 3N initiative.

Policy Area 3: Efficacy of Public Spending (ix) The Recipient transposes the UEOMA directives on fiscal transparency, budget nomenclature,

government accounting, and the chart of accounts into national law. (x) The Recipient’s Ministry of Finance completes the interface between the computer systems of the

Directorate General of the Budget and the Directorate General of the Treasury and Government Accounting to support enhanced budget execution.

(xi) The Recipient’s Ministry of Finance creates a directorate to supervise State-owned enterprises. (xii) The Recipient issues implementation regulations for the new procurement code, including on

procurement thresholds, sanctions, and institutional responsibilities. (xiii) The 2007 and 2008 independent audits by the Recipient’s Public Procurement Regulatory

Agency have been completed and the Recipient has published: (i) the audit reports on its web site, and (ii) a summary of the auditors’ findings in the Le Sahel newspaper.

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VI. OPERATION IMPLEMENTATION

A. POVERTY AND SOCIAL IMPACTS

146. SGC-1 provides incremental resources to help finance the implementation of the PRSP and to support the Government’s reform program to foster shared economic growth and improve public financial management. The expected impact of individual prior actions on poverty and social development is as follows:

147. Promoting private sector growth. Improvements in the business environment supported by the SGC series are expected to facilitate the diversification of the economy beyond uranium and agriculture. This is expected to translate into higher economic growth and, particularly important for Niger, into less volatile growth. The poverty assessment highlights the imperative of achieving higher growth for progress in poverty reduction and with many other social indicators. The poverty assessment also suggests that during 2005 and 2007/8, growth was pro-poor as the poor have benefitted more from growth than the non-poor, which underlines the adequacy of the focus on economic growth in order to achieve poverty reduction.

148. The poverty assessment also demonstrates the devastating impact of economic volatility on poor households, and the high welfare cost of economic volatility for the poor. With about 80 percent of all Nigeriens deriving their livelihoods from agriculture and livestock, poor harvests and changes in agricultural prices are the dominant shocks experienced by households and result in the loss of assets and reduced consumption. Broadening economic opportunities for the poor through the diversification of the economy can thus be expected to have a significant impact on poverty reduction.

149. As agriculture provides the livelihood for about 80 percent of Niger’s population and about 90 percent of Niger’s poor, increasing agricultural productivity and incomes has potentially the biggest impact on poverty reduction in the short to medium term. Current research argues that agricultural investments are strongly pro-poor, with particular emphasis on the positive impact of public expenditure on agricultural research and development which can promote higher productivity by improving the interaction between physical and human capital inputs. Improving access to appropriate technologies will boost productivity with the potential to increase rural household income earned from traditional agriculture and from more high-valued production supply chains. At the same time, these reforms would help to build resilience to external shocks. It is anticipated that increased agricultural incomes and resilience to external shocks will translate into reduced poverty and improved human capital outcomes in education, nutrition, and other dimensions of health. The executive secretariat of the National Council for Agronomic Research would also manage the development and implementation of an action plan to mainstream gender considerations in R&D programs based on the gender strategy prepared by the West and Central African Council for Agriculture Research and Development.

150. Reforms to strengthen public financial management and public procurement are expected to result in more efficient usage of public resources and more efficient implementation of pro-poor programs. As the budget is an important instrument for the implementation of Niger’s PRSP, these reforms are essential for better alignment of the budget with the PRSP and accelerated progress towards the PRSP objectives. It is important to note that this is also expected to have a positive gender impact as many pro-poor expenditure programs have important positive gender impacts, such as programs to achieve

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universal primary education and thus close the gender gap or programs to reduce child and maternal mortality.

B. ENVIRONMENTAL ASPECTS

151. The specific reforms supported by the proposed development policy credit are not likely to have significant negative effects on the country’s environment, forests and other natural resources. Niger’s environmental policies and institutions are primarily geared towards the protection and the sustainable use of natural resources. From a strategic perspective, natural resources management is a key priority for Niger as reflected in three programs under the rural Development Strategy Action Plan: Gouvernance des Ressources Naturelles; Préservation de l’environnement; and Restauration des terres déboisées. Issues related to low funding of programs and implementation capacity limit the Government’s ability to improve environmental sustainability. Programs and projects to deal with environmental issues and natural resource management exist and many are supported by the Bank.

152. Niger’s legal framework includes a decree on Environmental Assessments that ensures the integration of environmental considerations at the project level but not at the strategic levels. Institutional responsibility lies with the Office of Assessments and Environmental Impact Studies (BEEEI), attached to the Ministry of the Environment and Desertification Control. BEEEI has been providing cross sector support not only to sectoral ministries, but also to local communities. Small environmental units have been established at the regional levels in order to build environmental management capacity at regional and local levels. Most of these units are, however, not functional due to the lack of resources and training; and are in most cases represented by one person, usually referred to as the regional BEEEI specialist. BEEEI is also responsible for involving civil society and affected population through environmental hearings and EA validation workshops. However sophisticated these procedures are in theory, they suffer in practice from major shortcomings with regard to financial and human resources. The capacity of the BEEEI as a key actor suffers from low budgetary allocations and lack of adequate personnel. It is mostly involved in monitoring the implementation of Bank safeguards instruments and projects frequently facilitate their participation by providing funds for monitoring trips and participation in regional trainings on environmental assessment and management.

153. Policy reforms contained in the prior actions for SGC-1 are closely linked to investment support provided in these areas. These projects contain detailed provisions for the assessment and management of environmental impacts. Relevant projects include the Competitiveness and Growth Support Project (currently under preparation and expected to be submitted to the Board by mid 2012) covering reforms of the business environment, and the West African Agricultural Productivity Program covering reforms of the agricultural research system. These projects support the preparation and implementation of relevant environmental and social management frameworks and plans that would address the impact of these reforms through the BEEEI. The strengthening of the agricultural research system supported by this credit is expected to have a positive impact on the environment, as it allows the promotion of environmentally sustainable farming methods. Institutional reforms aimed at strengthening public financial management are expected to lead to an overall improvement in the governance environment, which potentially will also positively affect environmental and natural resource management. In particular, the support towards increasing pro-poor expenditures, which also includes spending by the Ministry for Water and Environment, is likely to have a positive impact on environmental conditions and management.

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C. IMPLEMENTATION, MONITORING AND EVALUATION

154. The reform program under the SGC-1 is coordinated by the Ministry of Planning, Regional, and Community Development, working closely with the Ministry of Finance and line ministries and other stakeholders. A harmonized process for review of progress and regular dialogue between Government and budget support donors is being developed. It envisages the establishment of a steering committee at the Ministerial level which would meet at least bi-annually and provide overall guidance and ensure political backing for the reform program defined in the policy and results matrix. At the technical level, at least three multisectoral technical committees would be established, responsible for the follow up and reporting on progress on the policy and results matrix and for engaging in regular dialogue with supporting budget support donors. The three core technical committees would cover shared growth, public finance, and the social sectors. Joint Government donor reviews would be carried out semi-annually. At the end of the proposed program of three operations, an evaluation of program implementation and the achievement of program objectives would be carried out.

Box 3: Good Practice Principles for Conditionality

Principle 1: Reinforce ownership There is strong country ownership of the program design given that it is based on the government program. Prior actions supported by the credit are drawn from sector strategies and action plans that were developed with extensive stakeholder consultations by Government to ensure broad ownership of reforms. There has also been extensive analytical work which has informed policy formulation in a timely manner.

Principle 2: Agree up front with the Government and other financial partners on a coordinated accountability framework The SGC series represents significant progress in establishing a coordinated accountability framework.It is a joint framework for IDA, EU, and AfDB budget support and is supported by a harmonized dialogue process.

Principle 3: Customize the accountability framework and modalities of Bank support to country circumstances The policy matrix was developed in close coordination with the Government and the various sectors, thus ensuring that it reflects the Government’s expressed policy intentions and the country’s circumstances. The design of policy reforms has been backed by analytical work. Most of the reforms are either ongoing or extensions of ongoing government initiatives which are prioritized in sector reform strategies. Enhanced coordination among budget support donors has reduced transaction costs and the expected timing of the IDA disbursement is aligned with the Government’s domestic budgeting process.

Principle 4: Choose only actions critical for achieving results as conditions for disbursement Prior actions are chosen from the policy matrix and focused on measures that are critical to achieving the objectives of the program. The matrix is selective and streamlined, consisting of 8 prior actions for the Bank’s operation.

Principle 5: Conduct transparent progress reviews conducive to predictable and performance-based financial support The SGC series identifies ex ante critical policy reforms which serve as key benchmark to assess progress and underpin decisions on financial support. Progress reviews are carried out jointly with the authorities and in partnership with other development partners. To enhance predictability, progress reviews will be gradually advanced in order to allow a firm decision on IDA’s budget support for the coming fiscal year at an early stage of Government’s budget process.

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155. Annex 2 and 3 present the key policy actions and results indicators monitored under the SGC program. These actions and indicators are part of the joint WB/EU policy and results framework presented in Annex 4. Monitoring indicators are primarily drawn from existing administrative data sources and surveys. In particular, a Living Standards Measurement Survey will be an important instrument to monitor progress over the SGC period. It’s first round was carried out in 2011 to provide baseline data for SGC monitoring and the second round will be implemented in 2014 to provide information on progress achieved during the SGC period.

D. FIDUCIARY ASPECTS

156. The Second Public Expenditure Management and Financial Accountability Review analyzed the institutional, legal and regulatory frameworks and performance of Niger’s public financial management and procurement systems. (see¶128 - 129) A plan to strengthen public financial management based on the recommendation of PEMFAR II was adopted in 2011. SGC-1 supports key elements of the public financial management reform agenda. IDA’s technical assistance project to the Ministries of Finance and Planning as well as several other donors, including the EU, the African Development Bank, and France, also provide important support for improving public financial management.

157. The budget is generally being published in the Journal Officiel immediately after promulgation of the budget law by the President. Promulgation of the budget has to take place at the latest 15 days after approval by the National Assembly, as prescribed in the relevant law. In conformity with these previsions, the budget has thus been published in recent years in the Journal Officiel around the middle of January. In 2012, due to administrative delays the 2012 Budget was only published on April 17 in the Journal Officiel. The Journal Officiel is available for public sale. While Government has in the past years published quarterly budget execution reports, the process lacked regularity and access was limited to development partners. Under the new ECF supported program the Government is committed to resume the compilation of comprehensive quarterly budget execution reports. Once the web site of the Ministry of Finance has become operational, it is expected that quarterly budget execution reports and a range of other budgetary information will be made available on that website. In the interim, Government has indicated that budgetary information could be made available on the web-site of the National Statistical Office which is fully functional and regularly maintained. Further efforts to improve budget transparency are underway, including the more timely preparation of the budget execution law, the preparation and publication of the report of the Court of Accounts, the publication of procurement audits, and continued adherence to the EITI with expanded coverage to include the oil sector.

158. The Central Bank of the West African States (BCEAO), the common central bank of the West African countries including Niger, continues to improve its governance structure. The updated safeguards assessment of BCEAO that was issued by IMF in March 2010 revealed that the institution continues to have controls in place at operational level. However, the IMF noted that, the overall governance framework should nonetheless be strengthened by the addition of an audit committee to ensure that the Board of Directors exercises appropriate oversight over the control structure, including the audit mechanism and financial statement. The upcoming implementation of the institutional reform of the West African Monetary Union (WAMU) and the BCEAO should help correct that situation. In addition, efforts to fully implement International Financial Reporting Standards (IFRS) should be pursued as adopted internationally by other central banks. The flow of funds arrangement

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between the Central Bank (BCEAO) and the Treasury is adequate with fiduciary risks within acceptable risk tolerance levels.

E. DISBURSEMENT AND AUDITING

159. The operation will follow the World Bank’s disbursement procedures for development policy lending. The untied balance of payments/budget support will be disbursed against satisfactory implementation of the development policy program and will not be tied to any specific purchases. No procurement requirements are needed. Once the operation is approved by the Board and the Credit becomes effective, IDA will disburse the single tranche at the request of the Recipient into a dedicated account that forms part of the country’s official foreign exchange reserves (held by BCEAO, the Central Bank). This dedicated account will be established for the purpose of this operation.

160. The financial support provided under SGC-1 is not intended to finance goods or services in the standard negative list. The Recipient shall ensure that upon the deposit of the Credit into said account, an equivalent amount is credited in the Recipient’s budget management system, in a manner acceptable to IDA. Based on previous experience, the execution of such transaction from the Central Bank to the Treasury (Ministry of Finance) does not require more than four days. The Recipient will report to IDA on the amounts deposited in the foreign currency account and credited in local currency to the budget management system. Assuming that the withdrawal request is in Euro, the equivalent amount in FCFA reported in the budgetary system will be based on the market rate at the date of the transfer. The Recipient will notify IDA by fax or email within 10 days of the transfer that such transfer has taken place, and that proceeds have been credited in a manner satisfactory to IDA. If after deposit in this account the proceeds of the Credit are used for ineligible purposes, IDA will require the Recipient to promptly refund the amount directly to the Association. Amounts refunded to IDA upon such request shall be cancelled. Although an audit of the deposit will not be required, the Bank reserves the right to require audits at any time. The administration of this credit will be the responsibility of the Ministry of Planning, Regional and Community Development. The expected closing date of SGC-1 is June 30, 2013.

F. RISKS AND RISK MITIGATION

161. The main risks include the potential for increased insecurity due to the Libyan crisis and conflict in Mali and Nigeria, fiscal risks if the ambitious resource mobilization objectives of the new Government do not materialize, continued vulnerability to external shocks, and governance, capacity and institutional weaknesses.

162. Conflict in Libya, Mali, and Nigeria creates additional risks of escalating conflict in an environment fraught with tensions over resource rents, terrorist activities, and expanding criminal activities such as drug trafficking and smuggling across the Sahara. In the wake of the Libyan crisis security risks have increased significantly due to the reported proliferation of arms in the region and the return of a large number of migrant workers, some of them former mercenaries and participants in insurgencies in the North of Niger. In an environment of continued tensions over the mineral resources in the North and regional activities of terrorist groups, an intensification of conflict would divert resources and attention from the implementation of the reform program and potentially limit the Bank’s ability to support and monitor the implementation of reforms on the ground. Government seeks to contain these risks through close security cooperation with regional and international partners, increased spending on security, and the design and implementation of a plan for development

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and security in the Sahelo-Saharan zone of the country. Its implementation will require significant amounts of resources, including donor support.

163. Ambitious government agenda in a context of limited resources. The Government has adopted a highly ambitious program to foster economic growth and ensure progress towards the MDGs, with matching expectations among the population. Equally ambitious resource mobilization efforts with respect to both domestic and external resources are to provide the necessary funding for the implementation of the government program. There is thus a significant risk that if resource mobilization efforts are not as successful as expected, Government may consider access to unsustainable sources of finance, including non-concessional finance and arrears. To mitigate the risk, adherence to the IMF supported program is critical. The Bank in collaboration with other budget support donors is also scaling up its dialogue and monitoring of budgetary issues.

164. External Shocks. Niger is prone to drought and more than 80 percent of its population depends on income from agriculture. Niger is also subject to strong price swings in the prices of export and import commodities. A deepening of the European debt crisis could have negative effects on Niger’s receipts of official development assistance, investment, trade, and remittances and increase the exchange rate risk, as Niger’s currency is tied to the Euro. On the export side the two important prices are those of uranium and the exchange rate between the FCFA and the Nigerian naira, which fluctuates closer to the dollar and is not fully convertible. Nigeria is Niger’s largest market for its agro-based exports (including livestock). A further deterioration of the security situation in Nigeria could also have significant negative economic impacts on Niger. In the wake of the Fukushima nuclear accident several countries are reconsidering the use of nuclear energy and the prospects for the global demand for uranium are uncertain. Recently, the price of uranium declined from above US$70 per pound at the beginning of the year to only US$51 in March 2012. Sustained low demand for uranium could have a severe negative effect on Niger’s exports and government revenue.19 A fiscal strategy that allows sufficient flexibility to adjust expenditures if external shocks materialize is key to mitigating these risks in the short term. In the medium to long term, sustained economic growth and diversification would reduce Niger’s high vulnerability to external shocks.

165. Institutional Capacity. While Niger has made significant improvements in its capacity to carry out its reform program and in administering more routine government operations, there is little doubt that many weaknesses remain. These weaknesses can be found across a wide range of areas: in the financial sector, in the building of a more conducive business regulatory environment, in the building of human resources (general education as well as vocational and technical education), in the quality and efficiency of its public administration, and in the transparency and accountability across the public sector. The building of individual and institutional capacity is a slow process. Most World Bank financed projects and programs now have a capacity building component.

166. Weak governance and corruption can potentially undermine the achievement of the targeted results of this operation and result to resource leakages. To mitigate this risks, several of the reforms supported by this operation aim at strengthening governance, including the improved management of agriculture sector institutions and public financing. The Bank also supports Government in the design and implementation of fiduciary reforms

19 The French energy company AREVA, which controls most of Niger’s uranium industry, suspended in November 2011 its operations at the Bakouma uranium mine in the Central African Republic due to low uranium prices in the world markets.

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and provides technical assistance for the development of a governance and anti-corruption strategy to enhance public resource management and service delivery.

167. Coordination between Ministry of Finance and Ministry of Planning, Regional, and Community Development. The new Government established a separate Ministry for Planning, Regional and Community Development to enhance economic planning and the coordination of development programs, while previously these functions were carried out by a Ministry of Finance and Economy. Given the central role the two ministries play in the coordination and implementation of budget support, smooth cooperation and coordination between the two ministries is essential. The fact that the Minister of Planning, Regional and Community Development is the Governor of IDA, while the Minister of Finance bears responsibility for EU program further heightens the need for a functioning coordination mechanism to overcome initial frictions between the two ministries. To mitigate the risk of coordination problems between the two Ministries, a joint coordination mechanism for the design and implementation of the harmonized budget support has been established.

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ANNEXES

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Annex 1: Letter of Development Policy

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REPUBLIQUE DU NIGER 

 

 

 

 

 

 

 

 

 

 

 

Mai 2012   

APPUI BUDGETAIRE POUR UN APPUI A LA CROISSANCE PARTAGEE

LETTRE DE POLITIQUE DE DEVELOPPEMENT

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CONTEXTE  Pays sahélo‐ saharien, le Niger est un vaste pays d’une superficie de 1 267 000 km2  dont les deux tiers (2/3) sont quasi désertiques. En 2012, sa population est estimée à 16 millions d’habitants vivant majoritairement en zone rurale. Le pays est confronté à plusieurs handicaps naturels (aridité du climat, sécheresse, enclavement). Toutefois, il est doté d’énormes potentialités minières, pétrolifères, agropastorales, artisanales et touristiques. En outre, le Niger est aujourd’hui un pays producteur de pétrole. La mise en valeur de ces potentialités pourrait être hypothéquée par une situation sécuritaire précaire. Conscient de ces menaces, le gouvernement de la 7ème République s’emploie à leur apporter des solutions  dans le cadre d’une politique sécuritaire nationale et sous‐régionale.  Le contexte politique reste marqué par le retour à la normalité constitutionnelle, suite à l’adoption d’une constitution par référendum consacrant la 7ème  République et  la tenue des élections locales, législatives et présidentielles, reconnues par tous, libres et démocratiques, et qui se sont déroulées dans un climat apaisé.   En dépit de la mise en œuvre depuis 2002, de la Stratégie de réduction de la Pauvreté (SDRP), le niveau de pauvreté reste encore important avec plus de 59% de la population qui vit en dessous du seuil la pauvreté.   La période 2011‐2012 reste marquée par les effets des trois chocs exogènes concomitants majeurs – les crises libyenne et malienne et les mauvais résultats de la campagne agricole 2011‐2012. La crise libyenne a particulièrement contribué à une hausse du niveau de l’insécurité en raison de la grande circulation des armes dans la sous‐région.  Le contexte de gestion de ces crises a nécessité la mise en place de programmes d’urgence dans les domaines concernés.  La mise en œuvre des mesures prises de renforcement des capacités d’intervention des Forces de défense et de sécurité et des programmes d’urgence suite aux mauvais résultats de la campagne agricole ont accaparé l’attention des autorités et une part importante des ressources destinées au financement des programmes  à moyen et long termes porteurs de croissance économique.   Tout en gérant ces chocs,  les autorités ont poursuivi  la mise en œuvre du programme de renaissance du Niger du Président de la République. Ce programme repose  sur cinq priorités stratégiques  :  la  consolidation  de  paix  et  de  la  sécurité,  le  renforcement  de  la  stabilité institutionnelle,  la  promotion  de  la  bonne  gouvernance  et  lutte  contre  la  corruption,  la sécurité alimentaire et le développement du capital humain. 

Pour  traduire cette vision en actions gouvernementales pour les cinq (5) prochaines années, le Premier Ministre a fixé dans sa Déclaration de Politique Générale les objectifs suivants :    

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i) Bâtir des institutions démocratiques fortes, crédibles et durables ; ii) assurer la sécurité des personnes et des biens sur toute l’étendue du territoire 

national ;  iii) relancer  l’économie  et  promouvoir  le  développement  social  à  travers  des 

investissements publics ; iv) assurer  la  sécurité  alimentaire  à  travers  l’initiative  « 3N : les  Nigériens 

Nourrissent les Nigériens » ; v)  assurer  l’accès  à  l’eau  potable  pour  tous  à  travers  la  réhabilitation  et  la 

construction d’ouvrages hydrauliques urbains, ruraux et pastoraux ; vi)  développer  les  infrastructures et  l’énergie par des  investissements dans  les 

routes,  les  pistes  rurales,  l’électricité  et  les  chemins  de  fer  et  les investissements aéroportuaires ; 

vii) améliorer significativement les indicateurs sociaux (éducation et santé) ; viii) créer des emplois au profit des  jeunes. Ces objectifs sont regroupés en trois 

axes stratégiques d’intervention qui sont :  

1. la  promotion  d’une  économie  de  croissance  et  de  développement durable ; 

 2.  la promotion du développement social ; 

 3. la promotion de la bonne gouvernance. 

 

Par  ailleurs,  en  2011,  le Gouvernement  a mis  en œuvre  un  programme  de  réformes  des politiques de croissance, appuyée par un appui budgétaire de  la Banque Mondiale dont  le but  est  d'aider  à  lever  les  contraintes  liées  aux  politiques  et  les  goulets  d'étranglement institutionnels  qui  entravent  la  croissance  par :  i) l’amélioration  du  cadre  des  affaires, ii) l’amélioration de l’entretien routier, iii) la promotion de la croissance du secteur rural, et iv) la poursuite des réformes dans la gestion des finances publiques. 

IL convient de souligner qu’au plan de la promotion de la bonne gouvernance, d’importants  résultats ont été atteints. Ainsi,  l’immunité parlementaire, d’un certain nombre de députés impliqués dans des dossiers d’indélicatesse, a été  levée. En outre, des  structures de  lutte contre la corruption ont été mises en place et sont devenues opérationnelles 

La présente Lettre de Politique de Développement a été élaboré dans le cadre du premier  crédit à d’appui budgétaire à la croissance partagée, dont l’objectif est de soutenir les réformes visant à promouvoir la croissance économique partagée et à accroitre l’efficacité de la dépense publique au Niger.   

 Elle s’inspire largement du programme de Renaissance pour le  Niger, dont la vision exprimée par SE le Président de République est que : «l’Etat doit  être suffisamment fort pour garantir à tous les citoyens sans exception une  vie meilleure dans la liberté, l’égalité, la justice et la solidarité ».    

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I. STRATEGIE  ET OBJECTIFS   

Les Autorités de la 7ème République ont décidé de repenser la gestion du développement, en réhabilitant le système de planification stratégique abandonné au profit de la gestion à court terme. A travers cette démarche de gestion du développement, les ambitions du gouvernement sont  i) de rétablir la souveraineté du pays sur sa vision de développement et ses choix de priorités d’investissements ; ii) de garantir une coordination efficace de la promotion d’un développement durable.  Cette volonté de relancer la planification a amené les autorités à créer un Ministère du Plan, de l’Aménagement du Territoire et du Développement Communautaire (MP/AT/DC) et au Gouvernement d’adopter en Août 2011 une note d’orientation Stratégique pour l’élaboration des documents suivants :   Un  document  de  stratégie  de  Développement  Durable  et  de  Croissance  Inclusive 

(SDDI): Niger 2035   Un Plan de développement Economique et Social (PDES) 2012‐2015  Un  Document  de  Programme  Intérimaire  de  Cadrage  de  l’Action Gouvernementale 

pour la période 2011‐2012.  Le Programme Intérimaire de Cadrage de l’Action Gouvernementale (PICAG) a été élaboré et adopté par le Gouvernement pour la période 2011‐2012.  A ce titre, le PICAG  a pour vocation essentielle de consolider les acquis du cadre macro‐économique, de prendre en charge les problèmes urgents auxquels devra faire face le pays au cours de la période 2011‐2012, de coordonner les actions de développement, de veiller à une utilisation rationnelle des ressources financières, et de créer les conditions de conception et d’élaboration de la Stratégie de Développement Durable et de Croissance Inclusive (Niger 2035) et du Plan de Développement Economique et Social (PDES 2012‐2015). 

 Le PICAG est en cours de mise en œuvre et les travaux d’élaboration du PDES sont en cours. Une fois adopté, par le gouvernement, le PDES servira de cadre de référence pour toutes les actions de développement et des interventions des partenaires techniques et financiers. 

  Le Niger a conclu avec le FMI un accord sur la Facilité Elargie de Crédit (FEC) qui a été approuvé par le Conseil d‘administration de cette institution le 16 mars 2012.  

 Ce Programme, qui couvre la période 2012‐2014, vise à : 

 

Préserver  la  stabilité macroéconomique  tout en améliorant  la  résistance du pays à faire face aux chocs éventuels ; 

Rationaliser la gestion des finances publiques et de la dette ; 

Mettre  en  place  un  cade  juridique  et  de  contrôle  transparent  pour  les secteurs minier et pétrolier ; et 

Appuyer le développement des secteurs privé et financier.  

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Les actions prioritaires de ce Programme portent à moyen terme sur la mise en œuvre d’une politique budgétaire visant à préserver la viabilité de la dette publique  tout en dégageant une marge de manœuvre pour accroitre les dépenses d’investissement, la poursuite de la réforme dans les régies financières par le contrôle des exonérations et l’amélioration du climat des affaires pour encourager le développement du secteur privé. 

 La mise en œuvre réussie de ce programme de réformes suscite beaucoup d’espoir. Ainsi, à terme,  l’économie  nigérienne  pourrait  aboutir  à  un  taux  de  croissance  économique  de l’ordre de 13,4% en 2012 contre 2,1% en 2011 et un taux d’inflation qui se situerait à 3,2%, légèrement supérieur à la norme de l’UEMOA de 3%. 

 Le premier crédit d’appui à la croissance partagée soutenu par la Banque mondiale appuiera les réformes dans les domaines  prioritaires suivants : 

 

Appuyer le développement du secteur privé ; 

Développement des compétences à l’appui de la croissance économique ; 

Développement agricole et rural ;  

Amélioration de l’efficacité de la dépense publique.  II. APPUYER LE DEVELOPPEMENT DU SECTEUR PRIVE 

 Le secteur privé au Niger est essentiellement composée de micro de moyennes et de petites entreprises qui interviennent surtout dans le secteur informel. Le développement du secteur privé  est entravé par l’environnement peu favorable aux investissements en raison des difficultés d’accès au financement, des coûts de facteurs élevés liés à l’insuffisance des infrastructures, de la main d’œuvre qualifiée et, de l’énergie.  

 C’est pourquoi, le Gouvernement a fait du secteur privé un instrument de  la croissance économique. A cet effet, il s’est engagé à tout mettre en œuvre pour améliorer le climat des affaires. Dans ce sens le Gouvernement a en place des groupes thématiques en vue d’élaborer un plan d’actions en 2012 de l’amélioration du climat des affaires. 

  Renforcement du dialogue entre les secteurs public et privé   

Des échanges réguliers entre les opérateurs privés et les pouvoirs publics sont nécessaires pour réduire les obstacles et les contraintes au développement du secteur privé. C’est pourquoi, dès 2007, le Niger a créé le Conseil National des Investisseurs privés (CNIP), principal outil du dialogue entre le Gouvernent et le secteur privé. Toutefois, cet outil a été peu opérationnel du fait de l’instabilité politique qu’a connue le pays.  

 Le Gouvernement a redynamisé ce cadre d’échanges par l’adoption d’un nouveau texte du CNIP dont la première réunion s’est tenue le samedi 05 mai 2012. 

    

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Réforme de l’administration fiscale   

Le Gouvernement fait de l’amélioration de la performance des régies financières une de ses priorités en vue notamment, de la mobilisation des ressources nécessaires au financement de son programme de développement. On note une légère amélioration du taux de pression fiscale qui a passé de 12 à 14%. L’Assemblée Nationale a adopté en 2012 le nouveau Code Général des Impôts qui améliore davantage la transparence du système. Les services fiscaux mettront en œuvre de mesures de rationalisation des contrôles fiscaux. 

 Code des investissements  

Afin d’attirer davantage les investisseurs, le Niger a entrepris la préparation d’un nouveau Code des Investissements qui devrait être finalisé en 2012 et dont l’objectif est d’accroitre les investissements dans les secteurs non miniers et dans les secteurs d’accompagnement des activités minières.  

 Elimination des obstacles au commerce  

En dépit de la politique de libéralisation du commerce intervenue depuis les années 1980, le commerce international continue à être confronté à des contraintes. 

 L’insuffisance des infrastructures de liaison et la persistance des mesures administratives n’ont pas  permis de réduire les longs délais constatés dans le mouvement des marchandises. D’après « Doing Business », le nombre de documents requis pour les exportations  (8) et celui requis pour les importations (10) est supérieur à la moyenne  respectivement de 7,7 et 8,7, observée en Afrique Subsaharienne. Le Gouvernement entend réduire en 2012  le nombre, les délais et les coûts d’obtention de ces documents. 

 Au plan interne, la multiplicité des barrages routiers continuent de créer des retards dans l’acheminement des marchandises et constituent des surcoûts. Le gouvernement prendra les mesures afin de limiter les barrages aux seuls contrôles de sécurité. Ces mesures sont également  en étude  dans le cadre régional. 

 Cadre réglementaire approprié pour les partenariats public privé  

Face à l’insuffisance des ressources internes et externes pour couvrir les besoins de financement de plus en plus croissants, le Gouvernement s’est engagé à développer les partenariats publics privés pour la réalisation des infrastructures. Dans ce sens, une ordonnance définissant le cadre général des PPP a été prise dès septembres 2011. Le cadre règlementaire a également été créé par l‘adoption d’un décret  et la mise en place d’une cellule d’appui aux PPP. 

     

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Amélioration de l’efficacité dans le secteur de l’énergie  

Les fréquentes suspensions de la fourniture d’énergie électrique constituent une contrainte majeure pour les activités économiques au Niger. En outre, le faible taux d’accès à l’électricité ne permet pas d’initier des activités non agricoles dans les zones rurales où vivent la majorité de la population. 

 Pour y remédier et en même temps réduire la dépendance vis‐à‐vis du Nigeria pour l’approvisionnent en énergie électrique, le Gouvernement s’est engagé dans la construction à court terme d’une centrale thermique de 100 MW à Niamey, lieu de concentration  de l’essentiel du tissu industriel.  A moyen et long terme, il est prévu la construction d’une centrale de 200 MW à charbon et d’une centrale hydroélectrique au niveau du barrage de Kandadji.  

 En outre, les autorités entendent améliorer la viabilité financière de la NIGELEC, société qui a la responsabilité de la production, du transport et de la distribution de l’électricité. Plusieurs mesures sont envisagées dont la restructuration de la Nigelec,  la préparation de modèle financier et d’une étude tarifaire en 2013. 

 III. DEVELOPPEMENT DES COMPETENCES A L’APPUI DE LA CROISSANCE 

 L’insuffisance des compétences constitue une contrainte majeure pour la croissance économique, le développement du secteur privé et la création d’emploi. Aussi, est‐il important de mettre l’accent sur l’éducation et le développement des compétences.  

 Le Gouvernement s’est engagé à développer la formation professionnelle par un plus grand accès des jeunes aux centres de formation, un renforcement des capacités des formateurs et une plus grande concertation avec les entreprises pour favoriser les stages et les apprentissages. En outre, le Gouvernement, à travers la création d’un ministère spécifique dédié à la formation et professionnelle et l’emploi, améliorera la coordination entre les divers ministères, partenaires et institutions pour une plus grande cohérence dans les actions de formation professionnelle.  Un partenariat étroit sera développé avec les entreprises pour le choix des filières et les apprentissages. 

 IV. DEVELOPPEMENT AGRICOLE ET RURAL 

 Le secteur rural en raison de son poids dans l’économie tant par sa contribution qui est de l’ordre de 40% au PIB et par l’importance de la population concernée (80%) est au cœur de la stratégie du développement du Gouvernement. Cependant, ce secteur reste confronté à de nombreux problèmes tels que la faible productivité, les aléas climatiques, le faible niveau d’encadrement des paysans, l’insuffisance de la recherche et de la vulgarisation, la faible superficie  des terres irriguées … 

 Le Gouvernement a élaboré une stratégie cohérente de développement de la production agricole et de sécurité alimentaire, intitulée, Programme « 3N », « les Nigériens Nourrissent 

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les Nigériens ». Ce programme vise l’augmentation de la production grâce entre autres à une meilleure utilisation des résultats de la recherche, le renforcement de la résilience aux changements climatiques par notamment  le développement de l’irrigation.  

 Renforcement de services de recherche et de vulgarisation  

L’amélioration de la production agricole passe par un renfoncement de l’organisation de la recherche scientifique dans le domaine de la recherche agricole. A cet effet, les autorités, ont créé le Conseil National de Recherche Agricole (CNRA) qui a pour mission d’élaborer une politique de recherche agricole et de suivre sa mise en œuvre. 

 Le Gouvernement a pris les dispositions pour rendre le CNRA opérationnel en le dotant d’un personnel et d’un budget suffisants pour mener ses activités. 

 Amélioration du cadre réglementaire pour le développement de l’irrigation  

Le développement de l’irrigation permettra de réduire la vulnérabilité à l’insuffisance de la pluviométrie et d’augmenter la production agricole. Toutefois, le développement de l’irrigation est entravé par, entre autres, l’insuffisance d’investissements et la gestion inefficiente des infrastructures d’irrigation.  

 Le Gouvernement prendra les mesures pour améliorer le cadre institutionnel de l’irrigation notamment par la restructuration de l’Office National des Aménagements Hydro Agricoles (ONAHA)  et la révision des textes de gestion des infrastructures d’irrigation qui prend en compte les perspectives de l’Initiative 3N.  

 Création d’un système efficace de valeur ajoutée dans le secteur de l’élevage  

Les produits de l’élevage constituent près du quart des exportations du Niger hors mines et a un fort potentiel de développement. Le développement de l’élevage est, toutefois,  confronté à des problèmes d’organisation de la filière et d’absence de valeur ajoutée pour les exportations. 

 Le Gouvernement adoptera et mettra en œuvre des mesures pour améliorer la gestion des abattoirs sur la base d’une étude qui évaluera, entre autres, le rôle du secteur public et du secteur privé dans leur gestion.  

 Une politique de sécurité sanitaire des denrées d’origine animale sera également  élaborée et adoptée par le Gouvernement en 2013. 

 Amélioration de l’efficacité du système de sécurité alimentaire  L’amélioration de la sécurité alimentaire passe outre par le développement de la 

production, mais aussi, par l’amélioration de la gestion de l’Office des produits vivriers du Niger (OPVN), chargé de la gestion de la réserve stratégique. 

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Le Gouvernement mettra en œuvre des réformes de l’OPVN  concernant le système d’approvisionnement, de suivi et de gestion des stocks alimentaires de sécurité sur la base des recommandations faites par la Cour des Comptes et de l’étude sur les risques agricoles.   V. AMELIORATION DE L’EFFICACITE DE LA DEPENSE PUBLIQUE 

 L’amélioration de l’efficacité de la dépense publique constitue une préoccupation pour le Gouvernement. A cet effet, les mesures ci‐après seront mises en œuvre. 

 Renforcement des systèmes de gestion des finances publiques  

Le gouvernement intensifiera les réformes en matière de gestion des finances publiques.   

Le Gouvernement a adopté en décembre 2011, un plan global de gestion des finances publiques pour la période 2012‐2014. Ce plan indique les réformes à mener notamment en matière de recouvrement des recettes fiscales, de la préparation et de l’exécution du budget, d’établissement des comptes financiers, de contrôles et de transparence, de  la gestion de trésorerie, de la dette et de la  passation des marchés publics. 

  Dans le cadre de la mise en œuvre de ce Plan, plusieurs actions et mesures ont été déjà prises. Il s’agit, notamment de l’adoption d’une nouvelle loi de finances organique conforme aux directives de l’UEMOA, de la nomination des receveurs au sein des administrations de la Direction Générale des Impôts (DGI) et de la Direction Générale des Douanes (DGD) en tant que comptables spéciaux relevant du réseau comptable du Trésor,  et de l’élaboration du rapport des contrôles physiques  inopinés  des marchés soumis à appel d’offres. D’autres actions telles que la surveillance des entreprises publiques seront prises par la création d’une direction dédiée au sein du ministère chargé des finances. 

 Renforcement des systèmes de passation des marchés publics  

L’efficience de l’utilisation des ressources publiques repose entre autres, sur un système de passation de marchés basé sur un respect strict des règles de concurrence.  Poursuivant les réformes entreprises dans ce domaine, le Gouvernement a adopté, le 29 décembre 2011, un nouveau code de marchés et un code d’éthique des marchés en  adéquation avec les directives de l’UEMOA.  

 Dans le souci d’améliorer la transparence et l’éthique dans la passation des marchés, l'Agence de Régulation des Marchés Publics (ARMP) a procédé aux audits des marchés publics pour les années 2007et 2008. Le rapport de cet audit est publié sur son site Web  et la synthèse dans le Sahel du 11 mai 2012. 

 VI. NOUVELLES MESURES A METTRE EN  ŒUVRE DANS LE CADRE DU PROGRAMME D’APPUI  A LA CROISSANCE PARTAGÉE POUR LES ANNEES 2012 ET 2013  

    

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Réformes clés envisagées en 2012  

(i) Adoption d’une stratégie pour  les contrôles  fiscaux qui permettra de  limiter  les nombreuses descentes dans les entreprises et d’une procédure cohérente pour la sélection des cas à examiner et donner les instructions pour leur application. 

(ii) Rendre opérationnelle  l'interface entre  la Direction du budget et celle du Trésor afin d'améliorer le suivi de la chaîne des dépenses. 

(iii) Création  d’une  direction  au  Ministère  des  Finances  chargée  du  suivi  des entreprises publiques. 

(iv) Adoption des réglementations pour  transposer  les dispositions communautaires UEMOA concernant la transparence fiscale, la nomenclature budgétaire de l'Etat, le règlement général de la comptabilité et le plan comptable de l'Etat. 

(v) Mise en œuvre des mesures pour éliminer les délais dans la fourniture du visa du Ministère des Finances pour des transactions en devises pour l'importation. 

(vi) Publication  des  textes  d'application  du  nouveau  code  des  marchés  publics portant  sur  les  seuils  des  montants  des  marchés,  les  sanctions  et  les responsabilités institutionnelles. 

(vii) Audit des marchés publics passés en 2009 et 2010 et publication des  rapports d’audit sur son site web et un résumé dans le journal Le Sahel. 

(viii) Adoption d’un cadre réglementaire pour la formation en alternance.   (ix) Adoption  d’un  acte  réglementaire  relatif  aux  types  de  contrôles  routiers,  aux 

points  de  contrôle  et  aux  mécanismes  de  recours  en  cas  de  besoin  afin  de minimiser les risques de pratiques anormales sur le commerce des biens au Niger. 

(x) Adoption d’un plan d'action pour l'amélioration du climat des affaires. (xi) Adoption  d’un  nouveau  code  d’investissement  qui  répond  aux  préoccupations  

identifiées  par  l’évaluation  de  la mise  en œuvre  du  code  actuel  avec  l’objectif d’être plus compétitif, de garantir une meilleure efficacité dans sa gestion et de contribuer un véritable  instrument de promotion des  investissements  locaux et étrangers et d’amélioration du climat des affaires  . 

(xii) Adoption  d’un  mécanisme  de  financement  compétitif  pour  la  recherche  et l'adoption de technologies agricoles afin de renforcer le lien entre les services de recherche et les besoins des producteurs. 

(xiii) Adoption  d’un  plan  de  restructuration  de  l'Office  national  des  aménagements hydro‐agricoles  (ONAHA)  qui  prend  en  compte  les  perspectives  de  la mise  en œuvre de l’initiative 3N. 

(xiv) Recrutement des consultants pour l’audit financier et opérationnel de NIGELEC et pour la préparation d’une étude tarifaire.  Il s’agit d’une mesure intermédiaire et non d’une mesure préalable.  Réformes clés envisagées en 2013  

(i) Préparation et adoption d’un décret portant préparation de la loi de finances en conformité avec les nouvelles directives UEMOA. 

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(ii) Rendre opérationnelle  le transfert des données comptables à travers  le système informatisé de  la comptabilité du gouvernement central au système  informatisé du budget aux niveaux régionaux. 

(iii) Régularisation de  la situation financière des entreprises publiques et apurement des arriérés et adopte des mesures pour éviter une ré‐accumulation d'arriérés. 

(iv) Adoption des textes d'application du code des marchés publics. (v) Audit des marchés publics de 2011 et 2012 et publication du  rapport de  l’audit 

sur le site web de l‘ARMP et d’une synthèse dans le journal Le Sahel. (vi) Adoption des  textes d'application du  cadre  réglementaire pour  la  formation en 

alternance  concernant  (a)  les  incitations directes et  indirectes pour encourager les entreprises qui emploient  les jeunes dans  le cadre des contrats de formation en alternance et (b) un contrat cadre entre les entreprises et les pouvoirs publics en vue de promouvoir les partenariats pour les formations en alternance. 

(vii) Mise en œuvre du plan d'action pour l'amélioration du climat des affaires.  (viii) Mise en œuvre des mesures additionnelles pour réduire le nombre, les délais, et 

les coûts des documents requis pour l'export et à l'import  (ix) Mise  en  œuvre  des  réformes  de  l’OPVN  concernant  le  système 

d’approvisionnement, de suivi et de gestion des stocks alimentaires de sécurité sur la base des recommandations faites par le Cour des Comptes et de l’étude sur les risques agricoles et des autres études et évaluations pertinentes. 

(x) Mise en œuvre du plan de restructuration de l'ONAHA. (xi) Adoption et mise en œuvre des mesures pour améliorer  la gestion des abattoirs 

sur  la base d’une étude qui évalue, entre autres,  le rôle du secteur public et du secteur privé dans leur gestion. 

(xii) Adoption d’une politique de sécurité sanitaire des denrées d’origine animale. (xiii) Adoption  d’un  plan  d'action  pour  la  restructuration  et  le  redressement  de 

NIGELEC  et  la  réforme  des  tarifs  sur  la  base  des  recommandations  d’un  audit financier  et  opérationnel  de  NIGELEC,  d’une  étude  tarifaire  et  d’un  modèle financier partagé entre les acteurs. 

 VIII.  DISPOSITIF DE SUIVI DE LA MISE EN ŒUVRE DU CREDIT A L’APPUI DE LA CROISSANCE PARTAGEE  Le Programme des réformes structurelles convenues dans le cadre du Crédit d’Appui à la Croissance Partagée (CCP) est coordonné par le Ministère du Plan, de l’Aménagement du Territoire et du Développement Communautaire travaillant en étroite collaboration avec le Ministère des Finances, les ministères techniques et les institutions concernées. 

 Un dispositif institutionnel pour la préparation et le suivi de la mise en œuvre des programmes de réformes soutenues par les différents bailleurs de fonds intervenant sous forme d’appui budgétaire, sera mis en place en concertation avec le Ministère des Finances.        

    

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Niamey, le ………………………………………    

Ministre d’Etat, Ministre du Plan, de l’Aménagement  du Territoire  et du Développement Communautaire Gouverneur de la Banque Mondiale pour le Niger 

  

 AMADOU BOUBACAR CISSE 

 

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Unofficial translation Republic of Niger Ministry of Planning, Regional and Community Development Cabinet of the Minister of State No. 360 CAB/MP/AT/DC Mr. Ousmane Diagana Country Director for Niger World Bank First Shared Growth Credit Mr. Director, The negotiations between the Nigerien delegation and the delegation of IDA concerning the First Shared Growth Credit in the amount of SDR 32.3 million equivalent to US$50 million took place from May 15-16, 2012 in Niamey. I am pleased with the good conduct of these negotiations and the cordial spirit which prevailed during the discussions. I would also like to express to the World Bank the gratitude of the Nigerien authorities for the diligence with which this important issue for our country has been dealt with. To satisfy one of the prior conditions for the submission of this credit to IDA’s Board of Executive Directors, I am pleased to transmit enclosed the Letter for Development Policy duly signed. In wishing you good receipt I remain faithfully, Amadou Boubacar Cisse

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REPUBLIC OF NIGER 

  

  

  

 Budget Support to Support Shared Growth 

  

 Letter of Development Policy 

  

First Shared Growth Credit 

 Letter of Development Policy 

  

  

May 2012 

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CONTEXT   Niger is a vast Sahel‐Saharan country with an area of 1,267,000 km2

 of which two thirds (2/3) are desert.    In 2012,  its population  is estimated at 16 million people  living mainly  in  rural areas.   The country  faces  several handicaps  (arid climate, drought,  isolation).   However,  it has  enormous  potential  in  mining,  oil,  farming,  ranching,  tourism  and  handicrafts.    In addition,  Niger  is  now  an  oil  producer. The  development  of  this  potential  could  be compromised by a precarious security situation.  Recognizing these threats, the government of the 7th Republic  is working to provide solutions within the framework of a national and sub‐regional security policy.  

The political context is marked by the return to constitutional order, following the adoption by  referendum of a  constitution enshrining  the 7th Republic and  local, parliamentary and presidential  elections  recognized  by  all  as  free  and  democratic,  which  took  place  in  a peaceful climate.  

Despite the  implementation of the Strategy to Reduce Poverty (SDRP) since 2002, the  level of poverty is still high with over 59% of the population living below the poverty line.  

The  period  2011‐2012  is marked  by  the  effects  of  three  concurrent major  shocks  –  the Malian  and  Libyan  crises  and  poor  performance  of  the  harvest  season  2011‐2012.    The Libyan crisis has particularly contributed to an increased level of insecurity due to the large flow of arms in the sub‐region.  

The management of these crises has necessitated the establishment of emergency programs in the concerned areas.  

The implementation of measures to strengthen the response capabilities of the defence and security forces and emergency programs following the poor crop performance have claimed much of the attention of the authorities and a significant portion of resources  intended for medium and long‐term programs to foster economic growth.  

While managing  these  shocks,  the  authorities  have  continued  the  implementation  of  the program of the “Renaissance of Niger” of Niger's President.   This program  is based on  five strategic  priorities:  consolidating  peace  and  security,  strengthening  institutional  stability, promoting  good  governance  and  the  fight  against  corruption,  food  security  and  human capital development. 

To  translate  this  vision  into  government  action  for  five  (5)  years,  the  Prime Minister  has established in his General Policy Statement the following objectives:  

i) Build strong, sustainable, and credible democratic institutions; ii)  Ensure the safety of people and goods throughout the national territory; iii)  Boost the economy and promote social development through public investment; iv)  Ensure food security through the initiative "3N: Nigeriens nourish Nigeriens"; 

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v)  Ensure  access  to  safe water  for  all  through  the  rehabilitation  and  construction  of urban, rural, and pastoral water infrastructure; 

vi)  Develop  infrastructure  and  energy  through  investments  in  roads,  rural  roads, electricity, railways, and airports; 

vii)  Significantly improve social indicators (education and health); and viii) Create jobs for young people.   

 These objectives are grouped into three strategic areas of intervention:  

1.   promoting economic growth and sustainable development; 2.   promoting of social development; and 3.    promoting good governance. 

  Moreover,  in 2011, the Government has  implemented a program of growth policy reforms supported by budget support  from  the World Bank that aims to remove policy constraints and  institutional bottlenecks hampering growth by:  i)  improving the business environment, ii)  improving  road maintenance,  iii) promoting  the  growth of  the  rural  sector, and  iv)  the continuation of reforms in the management of public finances. 

It  should  be  noted  that  in  terms  of  promoting  good  governance,  significant  results were achieved.  Thus, parliamentary immunity of a number of members of Parliament accused of involvement in the diversion of funds was lifted.  In addition, institutions for the fight against corruption have been established and became operational. 

This  Letter  of  Development  Policy  has  been  prepared  in  the  context  of  the  First  Shared Growth Credit, which aims to support reforms aimed at promoting shared economic growth and increasing the effectiveness of the public expenditure in Niger. 

  It  is grounded  in the program  for the Renaissance of Niger, whose vision expressed by His Excellency  the  President  of  the  Republic  is  that  "the  state  must  be  strong  enough  to guarantee  all  citizens  without  exception  a  better  life  in  freedom,  equality,  justice  and solidarity. "   I. STRATEGY AND OBJECTIVES 

  The authorities of the 7th Republic decided to rethink the management of the development process  by  rehabilitating  the  strategic  planning  system  abandoned  in  favor  of  short‐term management.    Through  this  process  of  development  management,  the  government's ambitions  are  i)  to  restore  the  country's  sovereignty  over  its  development  vision  and  its choice  of  investment  priorities,  ii)  to  ensure  effective  coordination  of  the  promotion  of sustainable development.  

This  desire  to  relaunch  planning  led  the  authorities  to  create  a  Ministry  of  Planning, Regional,  and  Community  Development  (MP/AT/DC)  and  to  introduce  in  August  2011  a strategic guidance note for the elaboration of the following documents:   

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 A Strategy for Sustainable Development and Inclusive Growth (SDDI): Niger 2035;  A Plan for Economic and Social Development (PDES) 2012‐2015; and   An Interim Framework Program of Government Action for 2011‐2012. 

  The Interim Framework Program of Government Action (PICAG) was developed and adopted by the Government  for the period 2011‐2012.   As such, the PICAG  is primarily  intended to consolidate  the  achievements  of  the macroeconomic  framework,  to  address  the  urgent problems  the  country will  face  during  the  period  2011‐2012,  to  coordinate  development activities,  to  ensure  efficient  use  of  financial  resources,  and  to  create  conditions  for  the design and development of the Strategy for Sustainable Development and Inclusive Growth (Niger 2035) and the Plan of Economic and Social Development (PDES 2012‐2015). 

  The  PICAG  is  under  implementation  and  development  of  the  PDES  is  underway.    Once adopted  by  the  government,  the  PDES  will  serve  as  a  framework  for  all  development activities and interventions of technical and financial partners. 

 

Niger has signed an agreement with the  IMF over the Extended Credit Facility  (ECF) which was approved by the Board of Directors of that institution on March 16, 2012. 

  This program, which covers the period 2012‐2014, aims to: 

  

 Maintain macroeconomic stability while improving the country’s resistance and ability to cope with possible shocks;  

 Streamline the management of public finances and debt; 

 Establish a  legal  framework and transparent oversight of the mining and oil sectors; and 

 Support the development of the private and financial sectors.   

The priority actions of  this program aim  in  the medium‐term  to  implement a  fiscal policy aimed  at  preserving  the  viability  of  public  debt  while  generating  flexibility  to  increase investment spending, the continued reform of the revenue agencies including the control of tax  exemptions,  and  improving  the  business  climate  to  encourage  private  sector development. 

  The successful  implementation of  this  reform agenda  raises much hope.   Thus, ultimately, the Nigerian  economy  could  achieve  an  economic  growth  rate  of  around  13.4%  in  2012 against 2.1%  in 2011 and an  inflation  rate of about 3.2%,  slightly higher  than  the UEMOA target of 3.0 percent.   

 The First Shared Growth Credit supported by the World Bank will support reforms in the following priority areas: 

  Support private sector development; 

 Skills development to support economic growth; 

 Agricultural and rural development; and 

 Improving the efficiency of public spending.  

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 II. SUPPORT THE PRIVATE SECTOR DEVELOPMENT  

The  private  sector  in  Niger  is mainly  composed  of micro, medium  and  small  businesses primarily  involved  in  the  informal sector.   The private sector development  is hampered by the unfavorable  investment environment because of difficulties of access  to  finance, high factor cost related to inadequate infrastructure, skilled labor and energy. 

  Therefore, the Government has made the private sector an instrument for economic growth.  To this end,  it pledged to make every effort to  improve the business environment.    In this sense, the Government has established working groups to develop an action plan in 2012 to improve the business climate. 

  Strengthening the dialogue between the public and private   

Regular exchanges between private operators and public authorities are required to reduce barriers  and  constraints  to  private  sector  development.  That  is why,  in  2007,  Niger  has created the National Council of Private Investors (CNIP), the principal instrument of dialogue between the Government and the private sector.  However, it was not operational because of political instability experienced by the country. 

  The Government has revitalized this dialogue framework by adopting a new legal framework for CNIP whose first meeting was held Saturday, May 5, 2012. 

  Reform of tax administration   

The Government made improving the performance of the revenue authorities a priority for inter alia, the mobilization of resources needed to finance its development program.  There was a slight  improvement  in the tax ratio from 12 to 14%.    In 2012, the National Assembly adopted  the  new  Tax Code which  further  improves  the  transparency  of  the  system.    Tax services will implement measures to streamline tax audits. 

  Investment Code   

To attract more investors, Niger has undertaken the preparation of a new Investment Code which  should  be  finalized  in  2012  and whose  objective  is  to  increase  investment  in  non‐mining sectors and in mining related activities. 

  Elimination of trade barriers   

Despite the policy of trade liberalization since the 1980s, international trade continues to be faced with constraints. 

  Inadequate  infrastructure  links and  the persistence of administrative measures have  failed to  reduce  the  long  delays  encountered  in  the movement  of  goods.   According  to  "Doing Business", the number of documents required for exports (8) and that required for  imports 

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(10)  is  above  the  average  observed  in  SSA  of  7.7  and  8.7,  respectively.  The Government intends to reduce in 2012, the number, the time and cost of obtaining these documents. 

  Within Niger,  the many  roadblocks continue  to create delays  in  the delivery of goods and constitute  additional  costs.    The Government will  take  steps  to  limit  road  blocks  only  to security checks.  These measures are also being studied in a regional context. 

  Appropriate regulatory framework for public private partnerships   

Faced  with  insufficient  resources  to  cover  increasingly  growing  internal  and  external financing needs,  the Government  is  committed  to develop public‐private partnerships  for infrastructure delivery.  In  this  sense, an ordinance defining  the general  framework of PPP was adopted  in September 2011. The regulatory  framework also  included a decree  for the establishment of a support unit for PPP, which has since been operationalized. 

  Improved efficiency in the energy sector   

Frequent interruptions in the electricity supply are a major constraint to economic activities in  Niger.  In  addition,  the  low  access  to  electricity  prevents  the  introduction  of  non‐agricultural activities in rural areas where the majority of the population lives. 

  To remedy this and to simultaneously reduce dependence vis‐à‐vis Nigeria for the supply of electrical energy, the Government launched in the short‐term the construction of a 100 MW thermal power station  in Niamey, where most of Niger’s  industrial activities are  located.  In the medium  to  long  term  it  is planned  to build a 200 MW  coal‐fired power  station and a hydroelectric power plant at the Kandadji dam. 

  In  addition,  the  authorities  intend  to  improve  the  financial  viability of NIGELEC,  the  state owned  company  that  is  responsible  for  the  generation,  transmission  and  distribution  of electricity.   Several measures are being envisaged,  including  the  restructuring of NIGELEC, the preparation of a financial model and of a tariff study in 2013. 

  III. SKILLS DEVELOPMENT IN SUPPORT OF GROWTH 

  Skill shortages are a major constraint to economic growth, private sector development and job creation.  Also, it is important to focus on education and skills development. 

 

The Government  is committed to developing vocational training by enhanced access of the youth  to  training  centers,  capacity  building  of  trainers  and  greater  cooperation  with businesses  to  promote  internships  and  apprenticeships.    In  addition,  the  Government‐ through  the  creation  of  a  specific  ministry  dedicated  to  professional  training  and employment ‐ will improve coordination among various ministries, agencies and partners for greater coherence in the area of vocational training.  A close partnership with businesses will be developed for the choice of courses and apprenticeships. 

  

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IV. AGRICULTURAL AND RURAL DEVELOPMENT   

The rural sector because of its weight in the economy both through its contribution is of the order  of  40%  to GDP  and  the  importance  of  the  population  (80%)  is  at  the  heart  of  the development strategy of  the Government.   However,  this sector still  faces many problems such  as  low  productivity,  climatic  factors,  the  low  level  of  organization  of  farmers, inadequate research and extension, and small area of irrigated land.... 

  The  Government  has  developed  a  coherent  strategy  for  the  development  of  agricultural production and food security, entitled, Program "3N"  ‐ "Nigeriens Nourish Nigeriens."   This program aims to increase production through, inter alia, better use of research results, and by enhancing resilience to climate change through the development of irrigation. 

  Strengthening services research and extension   

Improved agricultural production requires the strengthening of scientific research in the field of agricultural  research.   To  this end,  the authorities have created  the National Council of Agricultural Research (CNRA) whose mission is to develop an agricultural research policy and to monitor its implementation. 

  The Government has  taken  steps  to make  the CNRA operational by providing  it with  staff and a sufficient budget to carry out its activities. 

  Improving the regulatory framework for the development of irrigation   

The development of  irrigation will  reduce vulnerability  to  insufficient  rainfall and  increase agricultural  production.    However,  irrigation  development  is  hampered  by,  among  other things, inadequate investment and inefficient management of irrigation infrastructure. 

  The  Government  will  take  steps  to  improve  the  institutional  framework  for  irrigation including the restructuring of the National Office of Irrigation Schemes (ONAHA) and revision of  regulations  for  the management of  irrigation  infrastructure  that  takes  into account  the perspectives of Initiative 3N. 

  Creating an effective system of value addition in the livestock sector   

Livestock products constitute nearly a quarter of Niger's exports (excluding mining) and have a strong development potential.   Livestock development, however,  faces problems related to the organization of the industry and the lack of value addition for exports. 

  The  Government  will  adopt  and  implement  measures  to  improve  the  management  of slaughterhouses  on  the  basis  of  a  study  that will  assess,  among  other  things,  the  role  of public and private sector in their management. 

  

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A policy on safety standards  for meat products will also be developed and adopted by the Government in 2013. 

Improving the effectiveness of food security system 

  Improving  food  security  requires  the  development  of  production,  but  also  improving  the management  of  the  Office  of  Niger's  Food  Crops  (OPVN),  responsible  for managing  the strategic reserve.   The Government will implement reforms of OPVN concerning the supply system, monitoring and management  of  food  security  stocks  on  the  basis  of  recommendations made  by  the Court of Auditors and the study on agricultural risks.   V. IMPROVING THE EFFICIENCY OF PUBLIC EXPENDITURE 

  The efficiency of public  spending  is a  concern  for  the Government.   For  this purpose,  the following measures will be implemented. 

   Strengthening public financial management systems   

The Government will intensify reforms in public financial management.   

The  Government  has  adopted  in  December  2011,  a  comprehensive  public  financial management  reform  plan  for  the  period  2012‐2014.    This  plan  outlines  relevant  reforms particularly relating  to  the collection of  tax revenue, preparation and execution of budget, financial accounts, controls and transparency, cash management, debt and procurement. 

  As part of the implementation of this plan, several actions and measures were already taken. This  is,  in  particular  the  adoption  of  a  new  organic  budget  law  consistent with WAEMU directives,  the  appointment  of  special  accountants  “receveurs”  in  the  General  Tax Directorate  (DGI) and  the Directorate General of Customs  (DGC) as part of  the accounting network of the Treasury, and the preparation of a report on unannounced physical checks on  the  execution  of  public  procurement  contracts  subject  to  competitive  bidding.   Other actions such as better oversight of public enterprises will be taken by creating a dedicated department within the Ministry of Finance. 

  Strengthening procurement systems   

The efficient use of public resources is based, inter alia, on a procurement system based on strict compliance with competition rules.   Continuing reforms  in this area, the Government adopted  on  29  December  2011,  a  new  procurement  code  and  a  code  of  ethics  in procurement in line with WAEMU directives. 

  In order  to  improve  transparency and ethics  in procurement,  the Procurement Regulatory Agency  (ARMP)  has  conducted  audits  of  procurement  for  the  years  2007and  2008.    The 

75

report of this audit is published on its website and a synthesis was published in the Sahel of May 11, 2012. 

  VI. NEW MEASURES  TO  IMPLEMENT  THE  PROGRAM  IN  SUPPORT OF  SHARED GROWTH FOR THE YEARS 2012 AND 2013 

   Key reforms proposed in 2012   

(i) Adoption and implementation of a strategy for tax inspections that would reduce multiple firm visits and of a coherent procedure for the selection of cases that will be examined.

(ii) Completion of the interface between the computer systems of the Directorate General of the Budget and the Directorate General of the Treasury and Government Accounting to support enhanced budget execution.

(iii) Creation of a directorate to supervise State-owned enterprises. (iv) Transposition of the UEOMA directives on fiscal transparency, budget

nomenclature, government accounting, and the chart of accounts into national law. (v) Adoption of measures that would eliminate delays with respect to the registration

of foreign exchange transactions for imports with the Ministry of Finance. (vi) Issuing of implementation regulations for the new procurement code, including on

procurement thresholds, sanctions, and institutional responsibilities. (vii) Audit of 2009 and 2010 procurements and publication of the audit reports on its

web site and of a summary in the Le Sahel newspaper. (viii) Adoption of a legal framework for dual apprenticeships. (ix) Issuing of regulations concerning road blocks and controls, which define the type

of controls, location of road blocks, and recourse mechanisms in order to minimize the risk of abusive practices for merchandise transport in Niger..

(x) Adoption of an action plan for the improvement of Niger’s business environment. (xi) Adoption of a new investment code which responds to the issues identified in the

evaluation of the application of the current investment code with the objective of greater competitiveness, ensuring greater efficiency in its application, and to provide a true instrument for the promotion of domestic and international investment and to improve the business environment.

(xii) Establishment of mechanisms for competitive financing of agricultural research and the adaptation of technologies to strengthen the link between agricultural research and the needs of producers.

(xiii) Adoption of a restructuring plan of the National Irrigation Office (ONAHA) which takes into account the perspectives of the implementation of the 3N initiative.

(xiv) Recruitment of consultants for the financial and operational audit of NIGELEC and for the preparation of a tariff study. (This is an interim measure and not a prior action.)   Key reforms proposed in 2013   

(i) Preparation and adoption of a decree concerning the preparation of the Finance Law in conformity with the WAEMU directives.

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(ii) Operationalize the transfer of accounting data from the Central Government Accounting Information System to the computerized budget systems of regional authorities.

(iii) Regularization of the financial situation of public enterprises, clearance of arrears, and adoption of measures to prevent re-accumulation of arrears.

(iv) Adoption of implementation regulations for the new procurement code. (v) Audit of 2011 and 2012 procurements and publication of the audit reports on its

web site and of a summary in the Le Sahel newspaper. (vi) Adoption of implementing regulations of the legal framework for dual

apprenticeships concerning framework contracts between Government and enterprises for the promotion of dual apprenticeships and incentives for enterprises to offer such dual apprenticeships.

(vii) Implementation of the action plan for the improvement of Niger’s business environment.

(viii) Implementing additional measures to reduce the number, time, and costs of required documents for export and import

(ix) Implementation of reforms OPVN on the supply system, monitoring and management of food security stocks on the basis of recommendations made by the Court of Auditors and the study on agricultural risks and other studies and relevant assessments.

(x) Implementation of the restructuring plan of ONAHA. (xi) Adoption and implementation of measures to improve the management of

slaughterhouses on the basis of a study that assesses, among other things, the role of the public and private sector in their management.

(xii) Adoption of a policy on sanitary standards for food products. (xiii) Adoption of an action plan for the restructuring and turnaround of NIGELEC and

tariff reform on the basis of recommendations of a financial and operational audit of NIGELEC, a tariff study and a financial model shared between actors.

 

VIII  FRAMEWORK FOR MONITORING THE IMPLEMENTATION OF THE FIRST SHARED GROWTH CREDIT 

 

The program of structural  reforms agreed under  the First Shared Growth Credit  (SGC‐1)  is coordinated by  the Ministry of Planning, Regional,  and Community Development working closely with the Ministry of Finance, the technical ministries and institutions concerned. 

 

An  institutional mechanism  for  preparing  and monitoring  the  implementation  of  reform programs  supported  by  various  donors  operating  in  the  form  of  budget  support, will  be established in consultation with the Ministry of Finance.      

 

Niamey, on .............................................    

Minister of State, Minister of Planning, Regional, and Community Development Governor of the World Bank for Niger   

Amadou Boubacar Cisse  

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Annex 2: Policy Matrix

Goals Prior Action SGC-1

(May 2012) Trigger SGC-2 (December 2012)

Trigger SGC-3 (September 2013)

Expected Outcome in 2014

Policy Area 1: Business environment

Improved regulatory environment.

The Recipient has issued a decree to modify the rules governing the National Private Investor Council and convened and held a first meeting of the National Private Investor Council’s members since 2007.

The Recipient adopts an action plan for the improvement of Niger’s business environment.

The Recipient makes significant progress in the implementation of the action plan for the improvement of Niger’s business environment.

Identification and implementation of domestically owned priority reforms to improve the business environment

Reduced transaction costs and more equitable treatment for tax compliance

The Recipient adopts and implements a strategy for tax inspections that would reduce multiple firm visits and of a coherent procedure for the selection of cases that will be examined.

More equitable and less burdensome regime for tax inspections

Increase in domestic and international trade.

The Recipient adopts measures that would eliminate delays with respect to the registration of foreign exchange transactions for imports.

The Recipient implements additional measures to reduce the cost and time needed for the preparation of documents for export and import, including reduction in the number of documents required.

Reduction in cost and time of trade related administrative procedures

The Recipient issues regulations concerning road blocks and controls, which define the type of controls, location of road blocks, and recourse mechanisms in order to minimize the risk of abusive practices for merchandise transport in Niger.

Creation of an appropriate regulatory framework for

The Recipient has adopted a regulatory framework for

Increased private sector participation in the

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Goals Prior Action SGC-1 (May 2012)

Trigger SGC-2 (December 2012)

Trigger SGC-3 (September 2013)

Expected Outcome in 2014

public-private partnerships public-private partnerships which facilitates and creates greater flexibility for public-private collaboration, and includes the general regime for public-private partnership contracts with the regulations for its application and the establishment of a public-private partnership support unit.

infrastructure sector

Financial sustainability of Niger’s power sector

The Recipient recruits consultants to carry out an operational and financial audit of NIGELEC and to prepare a tariff study.

The Recipient adopts an action plan for the restructuring of NIGELEC and the revision of electricity tariffs based on an operational and financial audit of NIGELEC, a tariff study, and a financial model.

A financially stable power sector

Development of a dual apprenticeship system

The Recipient submits to the National Assembly a legal framework for dual apprenticeships.

The Recipient issues implementing regulations of the legal framework for dual apprenticeships concerning framework contracts between Government and enterprises for the promotion of dual apprenticeships and incentives for enterprises to offer such dual apprenticeships.

Increases in the number and quality of training opportunities for the youth.

Policy Area 2: Agriculture and Livestock Strengthening agricultural research and extension services

The Recipient has made the Executive Secretariat of the National Council for Agricultural Research operational through the recruitment of an executive secretary, deputy executive secretary, an accountant, a

The Recipient strengthens the link between agricultural research and extension through the establishment of mechanisms based on competitive financing of agricultural research and the adaptation of technologies.

Increase in agricultural research that responds to the needs of the agriculture sector and helps to increase agricultural productivity.

79

Goals Prior Action SGC-1 (May 2012)

Trigger SGC-2 (December 2012)

Trigger SGC-3 (September 2013)

Expected Outcome in 2014

monitoring and evaluation specialist and support staff, and the provision of adequate funding.

Improving the institutional framework for irrigation development

The Recipient adopts a restructuring plan of the National Irrigation Office (ONAHA).

The Recipient restructures the National Irrigation Office.

Increase in the productivity of areas under irrigation.

Creating an efficient system for value addition in the livestock sector

Improvement in the management structure and practices of public abattoirs, including consideration of private sector participation.

Increase in export in meat products

The Recipient adopts a new policy on sanitary standards for meat products.

Enhancing the efficiency of the food security system

The Recipient restructures the National Food Office (OPVN) to strengthen the procurement, management, and distribution of the national food reserve on the basis of the recommendations by the Court of Accounts and the findings of the study on managing agricultural risks.

Policy Area 3: Efficacy of Public Spending Strengthening of the legal and regulatory framework for public financial management

The Recipient has submitted to its National Assembly a new organic public finance law as the basis for modernizing the Recipient’s public financial management system in a manner consistent with WAEMU directives.

The Recipient transposes the UEOMA directives on fiscal transparency, budget nomenclature, government accounting, and the chart of accounts into national law.

The Recipient issues a decree concerning the preparation of the Finance Law in conformity with the WAEMU directives.

Strengthening public financial management systems

The Recipient has carried out physical inspections of the execution of at least two

The Recipient’s Ministry of Finance completes the interface between the

The Recipient’s Ministry of Finance ensures the transfer of accounting data from the

Improved rate of budget execution

80

Goals Prior Action SGC-1 (May 2012)

Trigger SGC-2 (December 2012)

Trigger SGC-3 (September 2013)

Expected Outcome in 2014

hundred (200) public procurement contracts of an individual value of more than CFAF 20,000,000 (and thus subject to competitive bidding) awarded in 2011 and has issued a report reflecting findings and containing recommendations in order to ensure value for money in public procurement.

computer systems of the Directorate General of the Budget and the Directorate General of the Treasury and Government Accounting to support enhanced budget execution.

Central Government Accounting Information System to the computerized budget systems of regional authorities.

The Recipient has nominated public accountants in the directorates of its Ministry of Finance responsible for tax and customs, respectively, as special accountants members of the network of Treasury accountants.

The Recipient’s Ministry of Finance creates a directorate under the direct authority of the Minister’s cabinet to supervise State-owned enterprises.

The Recipient adopts measures for the regularization of the financial situation of public enterprises, clearance of arrears, and prevention of re-accumulation of arrears.

Strengthened internal control, oversight and transparency

Strengthening procurement systems

The Recipient has issued by decree the new Procurement Code and the Procurement Ethics Code.

The Recipient issues implementation regulations for the new procurement code, including on procurement thresholds, sanctions, and institutional responsibilities.

The Recipient issues the remaining implementation regulations for the new procurement code.

Strengthened legal and regulatory framework for procurement, consistent with WAEMU directives.

The 2007 and 2008 independent audits by the Recipient’s Public Procurement Regulatory Agency have been completed and the Recipient has published: (i) the audit reports on its web site, and (ii) a summary of the auditors’ findings in the Le Sahel newspaper.

The Recipient’s Public Procurement Regulatory Agency audits 2009 and 2010 procurements and publishes : the audit reports on its web site and a summary in the Le Sahel newspaper.

The Recipient’s Public Procurement Regulatory Agency audits 2011 and 2012 procurements and publishes : the audit reports on its web site and a summary in the Le Sahel newspaper.

Increased transparency of public procurement.

81

Annex 3: Monitoring Indicators and Development Outcomes

SGC area Key Monitoring

Indicator Status in 2010 (or latest)

Target for 2012 Target for 2013 Target for 2014 Data source

Policy Area 1: Business Environment

Increasing investment

Investment in newly established firms (US$ million)

0 2 20 30 Investment and export promotion agency

Number of enterprises registered per year

0 500 1500 3000 Enterprise promotion agency

New PPPs established

0 6 6 6 PPP unit

Removing obstacles to commerce

Time to import 64 50 Doing business Time to export 59 44 Doing business Number of road blocks/100 km

3 1 WAEMU observatory for abnormal practices

Average number of meetings with tax officials/year

1.6 1.4 Enterprise surveys

Enhancing the efficiency in the energy sector

Net-profit of NIGELEC (FCFA bn)

1.17 >0 >0 >0 NIGELEC

Policy Area 2: Agriculture and Rural Development Strengthening research and extension services

Number of new technologies released by NCOS

0 1 3 5 WAAPP PCU

Area under new technology (ha)

0 2160 36,000 108,000 WAAPP PCU

Number of producers (agribusinesses) who have adopted improved

1800 30000 90000 15000 WAAPP PCU

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technologies Improving the regulatory framework for irrigation development

Productivity of areas under irrigation (t/ha)

4.5t/ha 6 t/ha

Policy Area 3: Efficacy of public spending Strengthening public financial management systems

Actual pro-poor expenditures to budgeted pro-poor expenditures

74 percent 90 percent 95 percent 100 percent Ministry of Finance

Strengthening public procurement systems

Share of public contracts tendered competitively (number)

68 percent >75 percent >75 percent >75 percent ARMP

Share of public contracts tendered competitively (value)

81 percent >80 percent >80 percent >80 percent ARMP

83

Annex 4: Joint Policy Matrix

30-May-12

Area n° National StrategyPartner

concerned

Macro-economic framework

1ECF supported macro-economic program

EU: general condition WB: general condition

Poverty reduction strategy

2 PESD EU: general condition

Public Financial Management

3Action Plan for the Strengthening of Public Financial Management

EU: general condition

Fiscal transparency 4Action Plan for the Strengthening of Public Financial Management

EU: general condition WB: general condition

Area n° 2012 (cut-off May 2012) 2013 (cut-off December 2012) 2014 (cut off September 2013) National StrategyPartner

concerned

The Recipient has adopted a regulatory framework for public-private partnerships which facilitates and creates greater flexibility for public-private collaboration, and includes the general regime for public-private partnership contracts with the regulations for its application and the establishment of a public-private partnership support unit.

Action Plan of the Diagnostic Trade Integration Study

World Bank

The Recipient recruits consultants to carry out an operational and financial audit of NIGELEC and to prepare a tariff study.

The Recipient adopts an action plan for the restructuring of NIGELEC and the revision of electricity tariffs based on an operational and financial audit of NIGELEC, a tariff study, and a financial model.

World Bank

The Recipient has issued a decree to modify the rules governing the National Private Investor Council and convened and held a first meeting of the National Private Investor Council’s members since 2007.

The Recipient adopts an action plan for the improvement of Niger’s business environment.

The Recipient makes significant progress in the implementation of the action plan for the improvement of Niger’s business environment.

World Bank

The Recipient adopts and implements a strategy for tax inspections that would reduce multiple firm visits and of a coherent procedure for the selection of cases that will be examined.

Action Plan of the Diagnostic Trade Integration Study

World Bank

The Recipient issues regulations concerning road blocks and controls, which define the type of controls, location of road blocks, and recourse mechanisms in order to minimize the risk of abusive practices for merchandise transport in Niger.

Action Plan of the Diagnostic Trade Integration Study

World Bank

The Recipient adopts measures that would eliminate delays with respect to the registration of foreign exchange transactions for imports.

The Recipient implements additional measures to reduce the cost and time needed for the preparation of documents for export and import, including reduction in the number of documents required.

Action Plan of the Diagnostic Trade Integration Study

World Bank

Adoption of a new investment code World Bank

SkillsThe Recipient submits to the National Assembly a legal framework for dual apprenticeships.

The Recipient issues implementing regulations of the legal framework for dual apprenticeships concerning framework contracts between Government and enterprises for the promotion of dual apprenticeships and incentives for enterprises to offer such dual apprenticeships.

Study on "Improving Education and Skills for Economic Growth"

World Bank

Satisfactory progress in the implementation of policies aimed and macro-economic stability X X X

Niger Joint Policy and Results Matrix - Reforms

Overall objective of the European Union: Support to the Plan for Economic and Social DevelopmentOverall objective of the World Bank: Support to the Plan for Economic and Social Development

General conditions 2012 2013 2014

Satisfactory progress in the implementation of the Plan for Economic and Social Development X X X

Satisfactory progress in the implementation of the public financial management reform plan X X X

Publication of the budget and progress in improving budgetary transparency X X X

Reforms: Expected Results

Infrastructure

Increased participation of the private sector in infrastructure

Financial sustainability of the power sector

Business environment

Improvement in the business environment

Reduction in transaction cost related to fiscal inspections

Reduction in transport cost and time

Reduction in the number, cost, and time needed concerning the preparation of documents for export and import

Increase in investments

Increase in opportunities for the youth

84

Area n° 2012 (cut-off May 2012) 2013 (cut-off December 2012) 2014 (cut off September 2013) National StrategyPartner

concerned

The Recipient adopts a restructuring plan of the National Irrigation Office (ONAHA).

The Recipient restructures the National Irrigation Office. 3N Initiative World Bank

The Recipient has made the Executive Secretariat of the National Council for Agricultural Research operational through the recruitment of an executive secretary, deputy executive secretary, an accountant, a monitoring and evaluation specialist and support staff, and the provision of adequate funding.

The Recipient strengthens the link between agricultural research and extension through the establishment of mechanisms based on competitive financing of agricultural research and the adaptation of technologies.

3N Initiative World Bank

The Recipient restructures the National Food Office (OPVN) to strengthen the procurement, management, and distribution of the national food reserve on the basis of the recommendations by the Court of Accounts and the findings of the study on managing agricultural risks.

3N Initiative World Bank

The Recipient adopts a new policy on sanitary standards for meat products.

3N Initiative World Bank

Improvement in the management structure and practices of public abattoirs, including consideration of private sector participation.

3N Initiative World Bank

The Recipient has submitted to its National Assembly a new organic public finance law as the basis for modernizing the Recipient’s public financial management system in a manner consistent with WAEMU directives.

The Recipient transposes the UEOMA directives on fiscal transparency, budget nomenclature, government accounting, and the chart of accounts into national law.

The Recipient issues a decree concerning the preparation of the Finance Law in conformity with the WAEMU directives.

Action Plan for the Strengthening of Public Financial Management

World Bank

The Recipient has carried out physical inspections of the execution of at least two hundred (200) public procurement contracts of an individual value of more than CFAF 20,000,000 (and thus subject to competitive bidding) awarded in 2011 and has issued a report reflecting findings and containing recommendations in order to ensure value for money in public procurement.

The Recipient’s Ministry of Finance creates a directorate under the direct authority of the Minister’s cabinet to supervise State-owned enterprises.

The Recipient adopts measures for the regularization of the financial situation of public enterprises, clearance of arrears, and prevention of re-accumulation of arrears.

Action Plan for the Strengthening of Public Financial Management

World Bank

The Recipient has nominated public accountants in the directorates of its Ministry of Finance responsible for tax and customs, respectively, as special accountants members of the network of Treasury accountants.

The Recipient’s Ministry of Finance completes the interface between the computer systems of the Directorate General of the Budget and the Directorate General of the Treasury and Government Accounting to support enhanced budget execution.

The Recipient’s Ministry of Finance ensures the transfer of accounting data from the Central Government Accounting Information System to the computerized budget systems of regional authorities.

Action Plan for the Strengthening of Public Financial Management

World Bank

The Recipient has issued by decree the new Procurement Code and the Procurement Ethics Code.

The Recipient issues implementation regulations for the new procurement code, including on procurement thresholds, sanctions, and institutional responsibilities.

The Recipient issues the remaining implementation regulations for the new procurement code.

Action Plan for the Strengthening of Public Financial Management

World Bank

The 2007 and 2008 independent audits by the Recipient’s Public Procurement Regulatory Agency have been completed and the Recipient has published: (i) the audit reports on its web site, and (ii) a summary of the auditors’ findings in the Le Sahel newspaper.

The Recipient’s Public Procurement Regulatory Agency audits 2009 and 2010 procurements and publishes : the audit reports on its web site and a summary in the Le Sahel newspaper.

The Recipient’s Public Procurement Regulatory Agency audits 2011 and 2012 procurements and publishes : the audit reports on its web site and a summary in the Le Sahel newspaper.

Action Plan for the Strengthening of Public Financial Management

World Bank

Reforms: Expected Results

Agriculture and livestock

Strenghtened insitutional framework for irrigation

Increase in agricultural production and resilience to climate change

Strengthening of food security

Strengthening of the livestock sector

Public financial management

Strengthening of the legal and regulatory framework for public financial management

Strengthening of internal controls

Streamlining of public expenditure execution to increase execution rate and accountability

Public procurement

Strengthened legal framework for public procurement

Increased transparency in public procurement

85

30-May-12

Area n° Objectif Indicator Baseline Target 2012 Target 2013 Target 2014 National Strategy Partner Concered Source for verification

Increased participation of the private sector in infrastructure

Number of new PPPs - 6 6 6 World Bank PPP unit

Financial sustainability of the power sector

Financial results of NIGELEC (FCFA bn.)

1.17 >0 >0 >0 World Bank NIGELEC

Volume of investment by newly created businesses (US$ million)

0 0 2 20 World BankAgency for Export and Import Promotion

Number of businesses created per year, of which 20 percent by women

0 500 1500 World BankAgency for Enterprise Promotion

Time for imports (days) 64 50 World Bank Doing business/WB

Time for exports (days) 59 44 World Bank Doing business/WBNumber of meetings with tax agency per year

1.6 reduction World Bank Enterprise survey/WB

Reduction of road blocks Road blocks - number 3/100 km 1/100 km World Bank ECOWAS Observatory for Number of new technologies issued by the National Center of

0 3 World Bank WAAPP report

Area under new technologies (ha) 0 108,000 World Bank WAAPP report

Number of producers that have adopted new technologies

1,800 30,000 90,000 World Bank WAAPP report

Increase in the productivity of irrigated cultures

Productivity of irrigated areas (t/ha)

4.5t/ha 6t/ha World Bank PRODEX report

Strengthened legal framework for public procurement

Percentage of competitive tenders 55%/83% (number/value) >75%/>80% >75%/>80% >75%/>80% World Bank ARMP

Increased transparency in public procurement

Evaluation of the procurement system according to the OECD methodology

1.8 (2009) improvement World Bank ARMP

Credibility of the budgetExecution rate of pro-poor expenditures

74% 90% 95% 100% World Bank PER

FP1

Improvement in the tax collection rate for large private enterprises

amount of recoveries made by the DGE / DGI on behalf of state and local governments, executed as of to 30/06/n on the stock of outstanding collections ended 31/12/n-1 for large private companies

stock of outstanding receivables as of 31/12/2011 = 7,419 M FCFA

cut-off date 31/06/2012 - establish legislation which makes the use of a tax idenfication number by professionals mandatory in banks

cut-off date 31/06/2013<13%

cut-off date 31/06/2014<13%

Action Plan for the Strengthening of Public Financial Management

European Union DGI statistics

FP 2

Rate of overdues

Amount of payment orders accepted by the Treasury in year n and unpaid beyond 60 days / total payment orders accepted by the Treasury in year n;

2010 = 4,61% 2011 = 5,44%

cut off date 31/06/2012 - plan for the settlement of the overdues prepared by the DGTCP and submitted to the Minister of Finance for approval

cut-off date 31/06/2013year 2012 < 1%

cut-off date 31/06/2014 year 2013 < 1%

Action Plan for the Strengthening of Public Financial Management

European Union General Treasury Balance

FP 3

Strengthening of internal and external control

Transmission of the report on the draft Budget Execution Law (LR) to the National Assembly by the Court of Auditors

Transmission of the report on the draft Budget Execution Law (LR) to the National Assembly by the Court of Auditors in August 2011 and 2008 accounts sent to the Court of Auditors by the Directorate General of Treasury and Public Accounting (DGTCP).

cut-off date 31/06/2012 neutralized by the following measure: Draft Organic Law on the Court of Auditors forwarded to the National Assembly by the Government prior to 30/06/2012 and 2008 accounts and 2009 Budget Execution Law (LR) transmitted by DGTCP and the Government, respectively, to the Court of Auditors before 30/06/2012

cut-off date 31/06/2013 Draft 2008 and 2009 Budget Execution Law (LR) transmitted by the Court of Auditors to the National Assembly and 2010 and 2011 accounts and 2010 and 2011 draft Budget Execution Law (LR) transmitted by DGTCP and the Government, respectively, to the Court of Auditors

Action Plan for the Strengthening of Public Financial Management

European Union

Letter by the President of the National Assembly confirming receipt of the draft Recgulation Acts

Public financial management

Niger Joint Policy and Results Matrix - Indicators

Infrastructure

Business environment

Agriculture and livestock

Increased development and adoption of new technologies

Public procurement

Increase in private sector investment in non-extractive sectors

Reduction in the time for exports and imports

86

Area n° Objectif Indicator Baseline Target 2012 Target 2013 Target 2014 National Strategy Partner Concered Source for verification

E1Primary gross enrollment ratio for girls

(number of girls in primary school/population of girls aged 7-12 years) x 100.

64% in 2009-2010 and 67,3% in 2010 – 2011

Substitute measure: Adoption by the government of a framework guidance document for the curriculum for the basic cycles - Basis of assessment: June 30, 2012.

(number of girls in primary/population of girsl between 7-

12 years) x 100) ≥ 70,7 %Basis of assessment : 30 juin 2013

PDDE European UnionStatistical yearbook MEN/A/PLN (electronic/preliminary).

E2 Primary completion rate

the completion ratio is the relationship between the children that do not need to repeat the last year of the primary cycle (CM2) and the total number of children who have the age to enter that class (12 years).

49.3% in 2009-2010 and 51,2 % in 2010-2011.

Substitute measure in 2012: Finalisation of action plan for implementation of the Sectoral Plan of Education and Training (PSEF) - Source of verification: document with the action plan of PSEF - Basis of assessment: June 30, 2012

Completion rate increased to 53,5% in 2011-2012

Completion rate increases to 55,9% in 2012-2013

PDDE European UnionStatistical yearbook MEN/A/PLN (electronic/preliminary).

E3 Management of the systemMeasures to improve the management of the school system

N/A

- Sharing the results of the study on school leavers with the Plan of Implementation of Recommendations - Source Verification: PDDE implementation report or the report of sharing meeting with donors / Minutes of the meeting MEN / A / PLN-PTF - basis of assessment: 30/06/2012.

PDDE European Union see targets

E4 Student Assessment

Identification of a series of measures whose implementation has an impact on the quality of learning. Targets are not quantitative measures but are extracted from the 2012 program budget and the programming for phase III of the PDDE. For each year there are corresponding measures to achieve.

N/A

Integration of multi-gradation and quality initiative in programs of teacher training colleges (ENI) - Source of verification: implementation report PDDE - Basis of assessment: 30/06/2012. - Sharing the results of the study on school leavers with the Plan of Implementation of Recommendations -Source Verification: PDDE implementation report or the report on the dissemination meeting with donors / Minutes of the meeting MEN / A / PLN-PTF - basis of assessment: 30/06/2012.

- Realization of the impact study of educational innovations of ERA and schools tutored on the quality of education - Source Verification: PDDE implementation report or the report of the study - Basis of assessment : 30/06/2013.

(The 2013 activities will be included in the program budget 2013. They are related to objective 2 component 3 of the PDDE third phase)

PDDE European Union see targets

Education

87

Area n° Objectif Indicator Baseline Target 2012 Target 2013 Target 2014 National Strategy Partner Concered Source for verification

S1 Share of assisted child births

Number of pregnant women who gave birth under supervision of a trained health worker (doctors, nurses, midwives) / total number of expected pregnancies (4.9% of Total Population).

The share of assisted child births was 29.5% in 2010 and 33.5.2% en 2011

"Development and validation of the five year work plan 2011-2015 of the PDS at a workshop of national consensus by June 2012." Source of verification: Final Five-Year Work Plan document signed by the Minister of Public Health. " Basis of assessment: 30/06/2012

Increase the share of assisted child births to 36 % in 2012

PDES European UnionDraft statistical yearbook of the SNIS

S2Modern contraceptive prevalence ratio

Number of women of childbearing age using contraceptives (new + old - (dropouts + lost to follow)) / Total number of women of reproductive age (15 to 49 years - 21.65% of Total Population)

21.2% in 2010 and 23% in 2011

"Validation of the Strategic Plan of the National Health Information System for the implementation of reforms." Source of verification: Report of the validation workshop and Strategic Plan document signed by the Minister. Basis of assessment: 30/06/2012

Contraceptive prevalence ratio of 25% in 2012

PDES European Union

Interim Report of the Statistical Yearbook of the health information system (NHIS) in 2011 and 2012 NDHS survey 2012 (the survey will cover the year 2011).

S3Percentage of treated malnutrition cases for children under 5

Number of treated malnourished children under 5 / the number of children of age suffering from acute malnutrition

87,86% in 2010 and 90% in 2011

Development and validation of a strategic plan for the implementation of national policy on nutrition Note from the Minister of Public Health attesting to the validation of the strategic plan for the implementation of national policy on nutrition, together with the document. Basis of assessment: June 30, 2012

the rate increases to 92% in 2012 PDES European UnionAnnual activity report of the Directorate of Nutrition, INS survey on "child survival"

S4Reimbursement ratio for free health care

Total amount reimbursed year n / total bills issued by the Ministry of Health and forwarded to the Ministry of Finance year n

The reimbursement ratio is 28% in 2010 and 45% in 2011

Final audit report on free health care available and start of implementation of the recommendations of this report by the Ministry of Public Health - Source Verification: Final audit report submitted by the Ministry of Public Health and descriptive annex detailing the status of implementation of recommendations. Basis for assessment of the indicator: June 30, 2012

Increase the reimbursement ratio to 80% in 2012

PDES European Union

Consolidated statement on the execution of the Finance Act of the current year, report on implementation of free health care

S5Vaccination ratio for Penta3 for children under 1 year

Number of children 0-11 months who received three doses of pentavalent / The total number of children aged 0-11 months expected (4.9% of Total Population)

The vaccination coverage rate is 78% in 2010 and 88% en 2011

Not assessedVaccination coverage rate ≥ 90% in 2012

PDES European Union

Interim Report of the Statistical Yearbook of the NHIS and follow up children survey by the INS.

Health

88

Annex 5: Fund Relations Note

89

Annex 6: Country At A Glance

Niger at a glance 4/5/12

Sub-Key Development Indicators Saharan Low

Niger Africa income(2010)

Population, mid-year (millions) 15.5 853 796Surface area (thousand sq. km) 1,267 24,243 15,551Population growth (%) 3.6 2.5 2.1Urban population (% of total population) 17 37 28

GNI (Atlas method, US$ billions) 5.7 1,004 421GNI per capita (Atlas method, US$) 370 1,176 528GNI per capita (PPP, international $) 720 2,148 1,307

GDP growth (%) 8.8 4.8 5.9GDP per capita growth (%) 5.0 2.3 3.7

(most recent estimate, 2004–2010)

Poverty headcount ratio at $1.25 a day (PPP, %) 44 48 ..Poverty headcount ratio at $2.00 a day (PPP, %) 75 69 ..Life expectancy at birth (years) 54 54 59Infant mortality (per 1,000 live births) 73 76 70Child malnutrition (% of children under 5) 40 22 23

Adult literacy, male (% of ages 15 and older) 43 71 69Adult literacy, female (% of ages 15 and older) 15 54 54Gross primary enrollment, male (% of age group) 73 104 108Gross primary enrollment, female (% of age group) 60 95 101

Access to an improved water source (% of population) 49 61 65Access to improved sanitation facilities (% of population) 9 31 37

Net Aid Flows 1980 1990 2000 2010

(US$ millions)Net ODA and official aid 165 388 209 749Top 3 donors (in 2010): European Union Institutions 9 42 13 151 United States 9 31 5 103 Canada 4 13 3 54

Aid (% of GNI) 6.7 16.0 11.7 13.6Aid per capita (US$) 28 50 19 48

Long-Term Economic Trends

Consumer prices (annual % change) .. -2.9 2.9 2.3GDP implicit deflator (annual % change) 20.8 -1.6 4.5 1.7

Exchange rate (annual average, local per US$) 211.3 272.3 712.0 495.3Terms of trade index (2000 = 100) .. 152 100 95

1980–90 1990–2000 2000–10

Population, mid-year (millions) 5.9 7.8 10.9 15.5 2.8 3.4 3.5GDP (US$ millions) 2,509 2,481 1,798 5,549 -0.1 2.4 4.2

Agriculture 43.1 35.3 37.8 .. 1.7 3.0 ..Industry 22.9 16.2 17.8 .. -1.7 2.0 .. Manufacturing 3.7 6.6 6.8 .. -2.7 2.6 ..Services 34.0 48.6 44.4 .. -0.7 1.9 ..

Household final consumption expenditure 75.1 83.8 83.4 75.1 -0.6 1.5 ..General gov't final consumption expenditure 10.4 15.0 13.0 11.5 4.4 0.8 ..Gross capital formation 28.1 8.1 11.4 22.6 -7.1 4.0 ..

Exports of goods and services 24.6 15.0 17.8 15.0 -2.9 3.1 ..Imports of goods and services 38.1 22.0 25.7 24.2 -6.3 -2.1 ..Gross savings 17.1 -2.1 2.8 ..

Note: Figures in italics are for years other than those specified. .. indicates data are not available.

Development Economics, Development Data Group (DECDG).

(average annual growth %)

(% of GDP)

15 10 5 0 5 10 15

0-4

15-19

30-34

45-49

60-64

75-79

percent of total population

Age distribution, 2010

Male Female

0

100

200

300

400

1990 1995 2000 2010

Niger Sub-Saharan Africa

Under-5 mortality rate (per 1,000)

-15

-10

-5

0

5

10

15

95 05

GDP GDP per capita

Growth of GDP and GDP per capita (%)

90

Niger

Balance of Payments and Trade 2000 2010

(US$ millions)Total merchandise exports (fob) 283 438Total merchandise imports (cif) 402 830Net trade in goods and services -135 -1,257

Current account balance -147 -1,198 as a % of GDP -8.2 -22.8

Workers' remittances and compensation of employees (receipts) 14 88

Reserves, including gold .. ..

Central Government Finance

(% of GDP)Current revenue (including grants) 10.3 11.3 Tax revenue 8.0 9.9Current expenditure 11.2 9.9

Technology and Infrastructure 2000 2010Overall surplus/deficit -5.7 -8.3

Paved roads (% of total) 25.7 20.7Highest marginal tax rate (%) Fixed line and mobile phone Individual .. .. subscribers (per 100 people) 0 25 Corporate .. .. High technology exports

(% of manufactured exports) 5.6 6.6

External Debt and Resource FlowsEnvironment

(US$ millions)Total debt outstanding and disbursed 1,708 1,127 Agricultural land (% of land area) 29 35Total debt service 26 27 Forest area (% of land area) 1.0 1.0Debt relief (HIPC, MDRI) 944 646 Terrestrial protected areas (% of land area) 7.1 7.1

Total debt (% of GDP) 95.0 20.3 Freshwater resources per capita (cu. meters) 299 234Total debt service (% of exports) 7.4 4.5 Freshwater withdrawal (% of internal resources) 67.5 7.0

Foreign direct investment (net inflows) 8 947 CO2 emissions per capita (mt) 0.07 0.06Portfolio equity (net inflows) 0 0

GDP per unit of energy use (2005 PPP $ per kg of oil equivalent) .. ..

Energy use per capita (kg of oil equivalent) .. ..

World Bank Group portfolio 2000 2010

(US$ millions)

IBRD Total debt outstanding and disbursed 0 0 Disbursements 0 0 Principal repayments 0 0 Interest payments 0 0

IDA Total debt outstanding and disbursed 723 275 Disbursements 68 14

Private Sector Development 2000 2011 Total debt service 14 3

Time required to start a business (days) – 17 IFC (fiscal year)Cost to start a business (% of GNI per capita) – 114.4 Total disbursed and outstanding portfolio 0 4Time required to register property (days) – 35 of which IFC own account 0 4

Disbursements for IFC own account 0 0Ranked as a major constraint to business 2000 2010 Portfolio sales, prepayments and (% of managers surveyed who agreed) repayments for IFC own account 0 0 Tax rates .. 32.8 Anticompetitive or informal practices .. 20.8 MIGA

Gross exposure – –Stock market capitalization (% of GDP) .. .. New guarantees – –Bank capital to asset ratio (%) .. ..

Note: Figures in italics are for years other than those specified. 4/5/12.. indicates data are not available. – indicates observation is not applicable.

Development Economics, Development Data Group (DECDG).

0 25 50 75 100

Control of corruption

Rule of law

Regulatory quality

Political stability and absence of violence

Voice and accountability

Country's percentile rank (0-100)higher values imply better ratings

2010

2000

Governance indicators, 2000 and 2010

Source: Worldwide Governance Indicators (www.govindicators.org)

IBRD, 0

IDA, 275

IMF, 61

Other multi-lateral, 446

Bilateral, 251

Private, 0

Short-term, 94

Composition of total external debt, 2010

US$ millions

91

Millennium Development Goals Niger

With selected targets to achieve between 1990 and 2015(estimate closest to date shown, +/- 2 years)

Goal 1: halve the rates for extreme poverty and malnutrition 1990 1995 2000 2010 Poverty headcount ratio at $1.25 a day (PPP, % of population) 72.8 78.2 .. 43.6 Poverty headcount ratio at national poverty line (% of population) 63.0 .. .. 59.5 Share of income or consumption to the poorest qunitile (%) 7.5 6.0 .. 8.1 Prevalence of malnutrition (% of children under 5) 41.0 .. 43.6 39.9

Goal 2: ensure that children are able to complete primary schooling Primary school enrollment (net, %) 23 24 27 57 Primary completion rate (% of relevant age group) 16 13 19 46 Secondary school enrollment (gross, %) 6 6 7 13 Youth literacy rate (% of people ages 15-24) .. .. 14 37

Goal 3: eliminate gender disparity in education and empower women Ratio of girls to boys in primary and secondary education (%) 53 60 65 78 Women employed in the nonagricultural sector (% of nonagricultural employment) .. .. .. 36 Proportion of seats held by women in national parliament (%) 5 .. 1 12

Goal 4: reduce under-5 mortality by two-thirds Under-5 mortality rate (per 1,000) 311 267 218 143 Infant mortality rate (per 1,000 live births) 132 115 98 73 Measles immunization (proportion of one-year olds immunized, %) 25 40 37 71

Goal 5: reduce maternal mortality by three-fourths Maternal mortality ratio (modeled estimate, per 100,000 live births) 1,400 1,300 1,100 820 Births attended by skilled health staff (% of total) 15 .. 16 18 Contraceptive prevalence (% of women ages 15-49) 4 .. 14 18

Goal 6: halt and begin to reverse the spread of HIV/AIDS and other major diseases Prevalence of HIV (% of population ages 15-49) 0.1 0.6 1.0 0.8 Incidence of tuberculosis (per 100,000 people) 125 138 152 185 Tuberculosis case detection rate (%, all forms) 53 16 28 35

Goal 7: halve the proportion of people without sustainable access to basic needs Access to an improved water source (% of population) 35 39 42 49 Access to improved sanitation facilities (% of population) 5 5 7 9 Forest area (% of total land area) 1.5 .. 1.0 1.0 Terrestrial protected areas (% of land area) 7.1 7.1 7.1 7.1 CO2 emissions (metric tons per capita) 0.1 0.1 0.1 0.1 GDP per unit of energy use (constant 2005 PPP $ per kg of oil equivalent) .. .. .. ..

Goal 8: develop a global partnership for development Telephone mainlines (per 100 people) 0.1 0.1 0.2 0.5 Mobile phone subscribers (per 100 people) 0.0 0.0 0.0 24.5 Internet users (per 100 people) 0.0 0.0 0.0 0.8 Computer users (per 100 people) .. .. .. 0.9

Note: Figures in italics are for years other than those specified. .. indicates data are not available. 4/5/12

Development Economics, Development Data Group (DECDG).

Niger

0

25

50

75

100

2000 2005 2010

Primary net enrollment ratio

Ratio of girls to boys in primary & secondary education

Education indicators (%)

0

10

20

30

2000 2005 2010

Fixed + mobile subscribers Internet users

ICT indicators (per 100 people)

0

25

50

75

100

1990 1995 2000 2010

Niger Sub-Saharan Africa

Measles immunization (% of 1-year olds)

92

1963 Level1973 Level

2001 Level

Mont GrebounMont Greboun(1,944 m )(1,944 m )

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D I F F AD I F F A

TéraTéra FilinguéFilingué

KolloKollo

IllélaIlléla

BirninBirninKonniKonni

BouzaBouza

KeïtaKeïta

Tchin-Tchin-TabaradeneTabaradene

AguiéAguié

MagariaMagaria

DakoroDakoro

TanoutTanout

IngalIngal

GouréGouré

Maïné-Maïné-SoroaSoroa

NguigmiNguigmi

BilmaBilma

MadamaMadama

ArlitArlit

DossoDosso

DiffaDiffaMaradiMaradi

ZinderZinder

TahouaTahoua

AgadezAgadez

TillabériTillabéri

NIAMEYNIAMEY

A L G E R I AA L G E R I A

M A L IM A L I

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N I G E R I AN I G E R I AB U R K I N AB U R K I N A

F A S OF A S O

BENINBENIN

To DjanetTo Djanet

To TamanrassetTo Tamanrasset

ToToGaoGao

ToToOuahigouyaOuahigouya

ToToOuagadougouOuagadougou

ToToKontagoraKontagora

ToToKadunaKaduna

To TajarhiTo Tajarhi

1515∞N

1010∞E 1515∞E

Téra Filingué

Kollo

Illéla

BirninKonni

Bouza

Keïta

Tchin-Tabaradene

Aguié

Magaria

Dakoro

Tanout

Ingal

Gouré

Maïné-Soroa

Nguigmi

Bilma

Madama

Arlit

Dosso

DiffaMaradi

Zinder

Tahoua

Agadez

Tillabéri

NIAMEY

A G A D E Z

NIAMEY

T I L L A B É R I

D O S S O

T A H O U A

M A R A D I

Z I N D E R

D I F F A

A L G E R I A

M A L I

L I B Y A

C H A D

N I G E R I AB U R K I N A

F A S O

BENIN

Niger

LakeChad

To Djanet

To Tamanrasset

ToGao

ToOuahigouya

ToOuagadougou

ToKontagora

ToKaduna

To Tajarhi

S a h e l

Té

né

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D

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A i r M t s .

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Mont Greboun(1,944 m )

15°N

10°E 15°E

20°N

15°N

10°E5°E0° 15°E

NIGER

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

0 50 100 150

0 50 100 150 Miles

200 Kilometers

IBRD 33457

SEPTEMBER 2004

N IGERSELECTED CITIES AND TOWNS

DEPARTMENT CAPITALS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

DEPARTMENT BOUNDARIES

INTERNATIONAL BOUNDARIES