Niger’s crisis from a socio-economic perspective
FEATURED BLOG
Niger’s Crisis from a Socio-Economic Perspective
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By Martin Nkonge, Analyst at Botho
September 13, 2023
The worsening extent of state fragility observed in certain West African nations is a potential hindrance to regional economic advancement. The slew of recent coups in the region, particularly in Niger, demonstrate the state of political turbulence that threatens to tear apart the country’s social fabric, sending shockwaves through an economy already grappling with instability, trade disruptions, and an escalating humanitarian crisis.
A brief political context
West Africa has endured its fair share of domestic turmoil over the years, but none has come at a more critical time, nor stirred more controversy than the recent tension in the region following the growing instability in Niger. While recent coups in other West African countries have amplified the state of political volatility in West Africa, the Niger coup has been a watershed moment in reshaping the perception of rising insecurity in the region. ECOWAS has openly opposed the coup and remains adamant that military intervention is still on the cards following the Nigerien junta’s reluctance to reinstate ousted president Mohamed Bazoum. Burkina Faso and Mali have stirred the pot even further by pledging their support for Niger’s military junta amidst the aggression claims from ECOWAS.
Beyond that, ECOWAS has also imposed a raft of economic sanctions on Niger including the suspension of all economic transactions, and freezing all potential economic assistance from regional banks. The AU has followed up on its commitment to maintaining peace in the turbulent region by suspending Niger from the bloc indefinitely on August 22. Despite the stern decisions by both ECOWAS and the AU, a quick resolution remains elusive. The longer the current status quo persists, there is an increased likelihood that the already delicate geopolitical space in Niger will trigger far-reaching consequences on the socio-economic paradigm in the country.
A SOCIO-ECONOMIC LENS
Due to recent events, political turmoil has occupied center stage in Niger's increasingly precarious situation, with the nation’s economic growth being relegated in some ways to the background. Niger has been one of the stand-out economies in West Africa in recent years, with up to 7.2% real GDP growth in 2022. Between 2021 and 2022, poverty in Niger decreased by 6.4%, augmenting the chances of achieving the anticipated drop in the population living in poverty by 2025 to 42.5%. Macroeconomic projections for the next few years were also largely optimistic prior to the political upheaval. Forecasts for 2023 indicate that Niger’s economy will continue its positive growth trend in terms of real GDP at 6.9%, nearly doubling in 2024 to 12.5%.
However, the political tension threatens to thwart any economic gains so far and derail the positive growth trajectory witnessed in the last few years. Foreign direct investment (FDI) remains a particularly ailing aspect of the economy, which could deteriorate with prolonged conflict. Niger’s trade balance has been worsening on a year-on-year basis between 2012 and 2022 with trade deficits in the country reaching $1.48 billion in 2022 up from 450 million in 2012. As one of the world’s largest producers of Uranium, Niger has been a top exporter of the mineral to Europe, accounting for 24% of Uranium imports in the EU, thus making it the leading source of Uranium in the region. France is a particularly significant beneficiary of Niger’s Uranium, with up to 17% of Niger’s Uranium imports generating electricity in the European nation. The escalation of conflict in Niger adds uncertainty and risk to future trade prospects, prompting concerns about its recovering economic trajectory.
Beyond macroeconomic terms, Niger’s populace has been grappling with rising commodity prices and a worsening humanitarian crisis. Residents are wary of rising prices of basic commodities resulting from supply chain disruptions due to the ECOWAS trade embargo. Ivory Coast has also suspended trade with the country and major borders between Niger and countries such as Benin and Nigeria remain closed. The trade corridor between Niamey, Niger’s capital, and Benin’s port of Cotonou services close to 1,000 vehicles in transit every day and the halting of such a significant route has contributed to the dwindling supply of consumer goods to Niger’s markets, leading to further inflation.
Currently, close to 4.3 million people in Niger are in need of humanitarian assistance stemming from the coup’s aftermath. The EU, United States and France have been instrumental in supplying relief aid in Niger, but recent developments have seen the indefinite suspension of external aid programs. France alone offered Niger development aid valued at close to $130 million in 2022, and the United States has paused all humanitarian and security aid programs valued at approximately $100 million. Between 2021 and 2024, the EU allocated $554 million for Niger’s development in key areas, such as education and improved governance. The suspension of some of the aforementioned aid initiatives will no doubt amplify the humanitarian crisis in Niger in the coming days.
In summation, the recent political turmoil in Niger cannot be viewed in isolation as “just another coup” in West Africa, hinged on political duels and ideological battles. Beyond the political dynamics, the socio-economic fabric of Niger is at risk of fraying, subjecting the masses to prolonged economic uncertainty and exacerbating existing humanitarian vulnerabilities. Drastic actions from either side will come at the expense of the ordinary citizens, who more often than not, have to bear the brunt of political flux.
Martin Nkonge is an Analyst at Botho Emerging Markets Group.