Balancing Boom and Burden: Niger’s Economic Rise Faces Inflation and Food Insecurity

The 2025 Economic Update for Niger, published by the World Bank in collaboration with national and international institutions such as the National Statistical Office (INS), the World Food Programme (WFP), the National Institute of Agronomic Research (INRAN), and the Network of Chambers of Agriculture (RECA), presents a picture of tentative economic recovery amid instability and risk. The report highlights Niger’s exceptional GDP growth of 8.4% in 2024, up from just 2.0% the previous year, driven by a rebound in rain-fed agriculture and the initiation of large-scale crude oil exports via the new Niger-Benin pipeline. Despite these positive signals, the economy remains vulnerable, heavily burdened by external shocks, climate variability, and the aftershocks of the political transition that began with the July 2023 coup. As the country attempts to stabilize and rebuild, it must navigate a precarious economic environment, high inflation, mounting debt, and a fragile financial system still grappling with the fallout of regional sanctions.

Sanctions and Oil: A Year of Highs and Lows

Sanctions imposed by ECOWAS and WAEMU after the unconstitutional change in government disrupted trade and financial flows for over seven months. Although lifted in February 2024, the consequences endured: supply chain bottlenecks, a border closure with Benin, and suspended development financing. Inflation surged to 9.1%, fueled largely by food prices and trade disruptions. Cereal production deficits from the previous year amplified the crisis, especially in urban centers. At the same time, Niger’s long-awaited oil boom began. Oil production more than doubled from 7 million barrels in 2023 to 15.5 million in 2024, with expectations of 28 million barrels in 2025. Oil exports rose by 48.5%, and crude is projected to contribute 13% of GDP next year. However, the anticipated fiscal windfall has yet to materialize. A $400 million advance loan from the China National Petroleum Corporation (CNPC), to be repaid using most of Niger’s 25% share in oil revenues, has limited budgetary gains. Pipeline attacks further disrupted production, revealing the fragility of Niger’s new oil-dependent growth model.

Public Finance Under Pressure and a Strained Banking Sector

Revenue performance was notably poor in 2024. Government revenue amounted to just 9.3% of GDP, far below the budgeted 14.4%, as trade-related taxes and grants collapsed. Grants fell from an average of 6.3% of GDP in previous years to 1.5% in 2024. Capital spending was slashed to 4.8% of GDP, about half of what had been planned. Still, this austerity helped narrow the fiscal deficit to 4.3% of GDP. However, the quality of spending deteriorated, with fewer resources available for critical social services. Debt servicing surged to 34.2% of domestic revenue, and debt arrears continued to rise. The IMF and World Bank downgraded Niger’s debt distress risk from moderate to high in early 2025.

Meanwhile, the banking sector descended into crisis. The average solvency ratio of Nigerien banks fell from 20.5% in mid-2023 to just 9.8% in August 2024, below the minimum regulatory threshold. Liquidity dried up as deposits fell and government arrears accumulated. Non-performing loans soared to 24% of total credit, and bank lending to the private sector dropped by over 80%. With firms unable to secure financing, formal job creation plummeted by 60%. Sectors such as health and education suffered, though employment in the extractives industry rose due to oil expansion.

Poverty Drops, But Food Insecurity Persists

Despite elevated inflation and economic distress, the national extreme poverty rate fell from 47.8% in 2023 to 45.3% in 2024. The primary driver was strong agricultural growth, especially in rain-fed farming, which benefited from favorable weather conditions. This translated into real per capita income gains for rural households. However, urban areas were hit hard by the sanctions. A World Bank-INS household phone survey in June 2024 revealed that 75% of households across all regions reported income declines, while 43% of household heads said their business activities had reduced. Niamey’s poor, particularly those in personal services and small trade, were most exposed.

Food insecurity remains severe. By October 2024, 1.5 million people were classified in crisis or emergency food insecurity (IPC Phases 3 and 4), and this number is projected to rise to 2.2 million during the 2025 lean season. A combination of conflict, floods, and economic shocks contributed to this deterioration. Though a harvest season price drop offered some relief, structural vulnerability persists.

Agricultural Reform: A Strategic Imperative

Agriculture remains Niger’s most vital economic sector, contributing over 40% to GDP and supporting 80% of the population. Yet it is plagued by low productivity, cereal yields are just 0.6 t/ha compared to a regional average of over 1.6 t/ha, and it is highly vulnerable to climate shocks. Irrigated agriculture, although limited to under 2% of farmland, accounts for a third of agricultural GDP and is concentrated in regions such as Tahoua and Maradi. New initiatives like the Large-Scale Irrigation Development Program (PDGI) and the World Bank-financed Livestock and Agriculture Modernization Project (LAMP) aim to expand irrigation, improve access to water and fodder, and upgrade livestock management systems.

The report emphasizes the need to scale up climate-smart agriculture (CSA), strengthen farmer organizations, enhance rural infrastructure, and increase financial inclusion. Currently, only 1% of bank loans support agriculture, severely constraining investment. Moreover, agro-processing remains rudimentary, with most exports still consisting of raw products and live animals.

Niger stands at a critical crossroads. The country’s 2024 rebound illustrates its resilience and potential, but it also highlights the deep vulnerabilities that must be addressed. With careful fiscal management, strategic agricultural reforms, and greater financial resilience, Niger could convert its current recovery into sustainable and inclusive growth over the coming years. Yet, without decisive action and improved governance, the gains of 2024 could quickly unravel.