The Covid-19 pandemic crisis and the security situation continue to undermine the Nigerien economy, wiping out years of hard-won gains in poverty reduction.
A number of fiscal policy options are, however, available to help the country enhance public expenditure efficiency and increase its GDP by up to 2%. These are the findings of the World Bank’s latest economic and poverty update for Niger published today.
The report titled “Maximizing Public Expenditure Efficiency for Rebuilding Better” analyzes the impact of the health and security crises on Niger’s economy. The economy grew by 5.9% in 2019, but slowed to 3.6% in 2020, as a result of the combined impact of these crises. This sharp downturn increased poverty levels and pushed an additional 400,000 people into extreme poverty.
“Nigeriens have been hard hit by the volatile security situation and these long months in the pandemic, with hundreds of thousands of children being kept out of school and deprived of proper health care, which will adversely affect their future,” notes Joelle Dehasse, World Bank Country Manager for Niger. “Turning this situation around will require massive and effective investments in human capital over the next few years.”
The report notes that these investments must be accompanied by bold structural and sectoral reforms aimed, among other things, at mobilizing more domestic resources, modernizing the administration, including the civil service, and promoting sound, prudent, and transparent government spending.
The projections for 2021 are nevertheless positive and economic growth is expected to rebound to 5.5%, driven by the reopening of the border with Nigeria, the resumption of large investment projects, and the normalization of several supply chains. However, these projections remain subject to the duration of the pandemic and the availability of vaccines, as well as to climate hazards and their impact on agricultural production and livelihoods.
“The government of Niger has made tremendous progress in recent years in managing its public finances, giving high priority to social spending,” says Paolo Di Lorenzo, World Bank Senior Economist and co-author of the report. “However, public expenditure pressures remain high, partly due to the deteriorating security situation. Against this backdrop, the authorities should take further steps to improve domestic resource mobilization and public spending efficiency.”
The report’s authors recommend reprioritization across a number of key sectors in order to ensure Niger’s strong economic rebound. These recommendations aim to redirect government revenues to basic social services and essential public infrastructure in order to maximize growth opportunities and social welfare. “Implementing the recommendations in the education sector will help improve spending and reallocate resources within the sector,” says Blaise Ehowe Nguem, Country Economist for Niger.
“This will improve the quality of education, thereby reducing repetition and dropout rates.”