Dependence on extractives revenues in Niger

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Overview

The International Monetary Fund describes Niger as having a growing dependency on extractive industry revenues. While such revenues have traditionally come from uranium exports, as of 2011 Niger began to produce oil, a development which is set to contribute to their reliance on natural resources.[1]

Sources of Revenue

International mining companies (IMCs) began production from Niger's large reserves of uranium in the 1970s.[2] After a short-lived boom Niger's uranium sector struggled due to stagnant world demand and falling prices on the international market in the 1980s.[3] As a result the uranium sector declined throughout the 1980s and 1990s.[2]

IMF statistics show a marked recovery for the uranium sector in the second half of the 2000s. In 2006 exports were worth US$ 150 million, accounting for four percent of GDP.[4]. The IMF estimates that uranium exports steadily increased in value after this and were worth US$ 0.48 billion by 2010 - accounting for approximately nine percent of GDP.[1] During this period uranium was consistently important for total export value, accounting for approximately 40-45 percent of all exports.

Gold mining has traditionally been carried out only on a small scale, and despite the opening of Niger's first commercial gold mine at Samira in late 2004, the contribution of gold to the economy has remained modest.[2]

November 2011 saw Niger enter in oil production when the CNPC-funded Soraz Oil Refinery was commissioned.[5]. .

IMF Predictions

An International Monetary Fund (IMF) report released in 2011 forecasted a GDP growth rate for the Nigerien economy of 14 percent, and predicted that more than half of Niger's GDP growth in 2012 would come from natural resource revenues. The report expected Niger's GDP to jump from it's 2010 level of US$ 5.53 billion, to US$ 9.56 billion by 2016, citing revenues from the extractive industries as the key driver of growth. Indeed, the report suggests that the contribution of a number of key projects within the extractive industries such as the Soraz Oil Refinery, the Azelik Uranium Mine and Imouraren Uranium Mine will mean that oil and mining exports are likely to triple in the medium term (2011-2016).[1]

With uranium and oil set to dominate Niger's growth and export revenues, the medium-term prospects for Niger's economy between 2011-2016 are forecasted to be favourable. However concerns were raised in the report over Niger's reliance on extractive industries. Uranium and oil revenues are vulnerable to commodity price fluctuations, and Niger's agricultural industry is already highly vulnerable to climatic shocks. The report also raised concerns that the rest of Niger's economy suffers from lack of private investment.[1]

However, the IMF suggest that likelihood of diversification in Niger is very low since it is a landlocked country and is already developing a dependence on natural resources. Niger has low levels of capital investment and trade within their economy, making investment outside of the extractive industries less likely.[1]

References

  1. 1.0 1.1 1.2 1.3 1.4 "Niger: 2011 Article IV Consultation" International Monetary Fund, retrieved 18 April 2012.
  2. 2.0 2.1 2.2 "Niger: Overview of the Extractive Industries" Extractive Industries Transparency Initiative, retrieved 18 April 2012.
  3. "Enhanced Heavily Indebted Poor Countries (HIPC) Initiative – Preliminary Document" International Monetary Fund, retrieved 18 April 2012.
  4. "Niger: 2008 Article IV Consultation" International Monetary Fund, retrieved 18 April 2012.
  5. "Niger enters oil era, commits to disclose revenues by 2012" Extractive Industries Transparency Initiative, retrieved 16 April 2012.