World Bank, WFP Study: Niger's Coup Left Economy in Tatters

FILE - A screenshot taken from video provided by ORTN, of Col. Maj. Amadou Abdramane and a delegation of military officers, announcing a coup d'etat in Niger, on July 26, 2023.

NIAMEY, NIGER — Sanctions and the suspension of international finance and aid have left Niger's economy, one of the world's poorest countries, hanging by a thread — developments happening three months after a July 26 military coup.

The European Union, EU, a key partner for the Sahel nation, had allocated 554 million dollars "to improve governance, education and sustainable growth" for Niamey from 2021-2024.

But the EU, France and other partners halted their budget support immediately after the overthrow of elected president Mohamed Bazoum.

The West African nation is currently estimated to be receiving financial support of 254 million dollars compared to 1.166 billion dollars before the coup, according to a study by the World Bank and World Food Programme, WFP.

The study found that Niger has received just 82 million dollars in development aid this year against the expected 625 million dollars — figures that from early October do not account for the United States suspension of 500 million in aid.

The EU says Niger has financed only 62 % of its national budget through internal revenue.

Niger's governing junta announced at the start of the month a 40 % cut in the 2023 budget due to "heavy sanctions imposed by international and regional organizations ... exposing the country to a major drop in external and internal revenue."

Sanctions by West Africa's regional ECOWAS bloc have prevented Niger from propping up its budget and banking transactions via the regional financial market run by the Economic and Monetary Union,UEMOA.

The ECOWAS sanctions have pushed Nigerien authorities to demand that taxpayers pay cash rather than deposit money on a Treasury account which has been frozen by the trade and economic restrictions.

The World Banks says Niger's crisis has led to the West African nation prioritizing civil servant salaries to the detriment of public investment.

Niger has missed several interest payments on loans which could "very probably" see the suspension of yet more international financial support, the bank added.

Nigeria, a supplier of 71% of Niger's electricity prior to the coup, contributed to Niamey’s crisis by halting its services.

Niger's Nigelec state-owned utility company can today meet between a quarter and half of demand across the country, the World Bank said, adding the financial situation was deteriorating.

It is likely to fall to 2.3 % if sanctions remain in place to the end of 2023, the bank said.

The risk of a lack of liquidity has however eased with money transfer companies continuing to operate in Niger, despite sanctions.

The supply of funds to Niger are "limited" according to the World Bank but generally help the poorest.

Niger's neighboring Mali has faced similar economic sanctions from ECOWAS seeking a return to democratic rule in the aftermath of a 2020 coup.

The World Bank noted last April that Mali’s economy has proved "resilient" under sanctions.

The budget deficit has stabilized at five percent of Gross Domestic Product, GDP, a "high level" that has seen public investment suffer and poverty increase, the bank said