A. Partnership in Niger’s Development Strategy

1. Niger’s first Poverty Reduction Strategy Paper (PRSP) was adopted in January 2002 and centered on four strategic pillars: (i) a macroeconomic framework ensuring economic and financial stability while promoting sustainable economic growth; (ii) the development of productive sectors, especially in rural areas; (iii) the development of basic social services; and (iv) the promotion of good governance and the strengthening of human and institutional capacities. The PRSP was based on a thorough poverty diagnosis and key development challenges. The Government reconfirmed the main thrust of the PRSP through four progress reports. Bank and Fund staff prepared a Joint Staff Advisory Note (JSAN) which was discussed at the IMF Board in December 2006 and distributed to the Bank’s Board on January 11, 2007. The Government has been using the PRSP to improve coordination of development efforts in the country, including donor-supported activities.

2. At a donors’ forum in Niamey on June 7 and 8, 2003, donors reaffirmed their endorsement of the PRSP as a strategic anchor for their assistance, and agreed on a progressive shift from project to program financing, and the need for further coordination and harmonization of policies and procedures. The forum resulted in the signing of a protocol agreement by all donors to coordinate their aid to the education sector.

3. Following delays in launching the preparation of analytical background papers, the Government’s second PRSP was completed and approved on October 10, 2007 by decree. The PRSP Secretariat visited Washington in early March 2007 for technical discussions on the second PRSP draft and benefited from global knowledge on PRSP and advice for improving the quality of the document from Bank staff together with IMF, UNDP, EU, UNECA and Belgium counterparts. Based on comments received, the government has updated the PRSP and held a national validation workshop in early April to discuss the strategy with parliamentarians, representatives from donor agencies, civil society and local government representatives from various regions of Niger. The second PRSP is built around seven strategic pillars (against four for the previous one) and includes all the main objectives of the first PRSP. The three new pillars are: (i) control of demographic growth; (ii) reduction of Inequity and Enhancement of Social Protection for Vulnerable Groups; and (iii) effective Implementation of the PRSP. A donors Round Table for the financing of the revised PRSP took place in Brussels on October 25-26, 2007 and bilateral and multilateral donors pledged about CFAF 1,334 billions to finance the implementation of the PRS II.

B. Areas in which the Bank leads

4. Privatization and regulatory reform. Key utility sectors, such as telecommunications and water supply have been liberalized and privatized with support from an IDA credit. However, the privatization of the electricity company (NIGELEC) has been delayed mainly due to the difficulty in finding private companies ready to invest US$60-100 million required for expansion and rehabilitation of the power system. The privatization of the wholesale petroleum product distribution company (SONIDEP) has failed in part because of difficulties in finding sound foreign private partners interested in investing in Niger. With the Bank’s assistance, the authorities revisited their objectives and approach to the private provision of infrastructure as they seek to enhance corporate governance for selected state-owned companies (NIGELEC, SONIDEP) and create a Government unit to implement the necessary reforms. The Bank supports also the strengthening of the regulatory body (ARM¹⁷), throughout building its capacity for issuing licenses and managing universal access. ARM successfully conducted the granting of a global telephony license to France telecoms (which bided CFAF 30 billion) in November 2007 following a fair and transparent process. The Fund is also a key partner in the policy dialogue in this area, for example through the continuous implementation of a petroleum pricing system.

5. Rural development. The Bank has provided support to Niger to develop and implement a comprehensive rural development strategy (SDR). This strategy aims at mitigating vulnerability and stimulating income generation and is centered on three pillars: (i) improving the access of rural populations to economic opportunities; (ii) protecting rural populations against risks and improving food security and managing natural resources sustainability; and (iii) enhancing the capacity of public institutions and rural organizations to improve the management of the rural sector. An SDR action plan covering the 14 programs of the rural development strategy has been adopted by decree in October 2006. The transition to a budget-program approach for the rural sector was finally completed with the adoption in October 2006, by decree, of a rural sector MTEF, recently updated to cover all line ministries. Bank assistance in this sector is provided through ongoing operations directly linked to the SDR action plan, including: the Private Irrigation Promotion Project II, which aims at increasing production and profitability of high-value, irrigated crops by private, smallholder farmers with simple, low-cost technologies; the Emergency Locust Project aimed at reducing Niger’s vulnerability to future desert locust infestations by supporting improved strategies for prevention early warning systems, reactions, and mitigation at both the national and regional levels; and the Community Action Program (CAP), which supports decentralized local financing mechanisms for village groups and communes, as well as promotes an integrated community-based ecosystem management. To enhance its existing investment program, the Bank also supports the GoN in the preparation of an agro-pastoral export promotion project and the second phase of the CAP, both scheduled for Board discussion before end-December 2008. Also, in terms of knowledge generating and analytical activities, the Bank provides support to the SDR sustainable land management agenda with activities financed through the TerrAfrica partnership platform, and is also preparing with the GoN an irrigation sector review. The Bank also supports the SDR through the series of Rural and Social Reform Credits (RSRCs), IDA’s Development Policy Credits to Niger, approved in June 2006 and 2007. More specifically, the RSRCs help the GoN (i) improve local governance of natural resources through further decentralization of land administration; (ii) reduce household vulnerability to food insecurity and improve the country’s capacity to manage and prevent food crisis; and (iii) increase contribution of irrigation to agriculture GDP.

6. Education sector. Within the framework of the Fast Track Initiative (FTI), Government has prepared a ten-year development plan in the education sector (PDDE) for 2003-2013 in collaboration with the Bank and other donors. The key objectives of the government program, which focuses mainly on primary education, are: (i) increasing access to both formal and non-formal basic education, in particular for children in rural areas, girls, and the poor; (ii) improving the quality and relevance of education; and (iii) developing capacities for the strategic and operational management of the sector at both the central and regional levels and increasing responsibilities assumed at the community level. The post-primary education program was adopted on January 16, 2008 and will help to define a strategic framework to ensure sustainable expansion of the secondary and other segments of the system as a response to the growing demands from the primary education leavers. The Bank’s Basic Education Project (US$30 million) supports improved access of the poor to primary education services. In addition, the first and second Rural and Social Reform Credits (RSRC-I and RSRC-II), are helping the government to (i) implement reforms to increase access of the population to basic education of acceptable quality; (ii) improve personnel management and budget allocations to the education sector; and (iii) foster governance and accountability through information sharing and empowering the community in the education sector. In the context of the FTI, the Bank facilitated the establishment of a Pooled Fund supplied by several donors to finance the PDDE. This Pooled Fund had been frozen following findings of an audit which revealed mismanagement of resources. Government, in earlier 2007, agreed with donors on fiduciary corrective measures to address this issue allowing the resuming of funding by external partners for this sector.

7. Health sector. The Bank has worked with government on the preparation of the Strategic Orientations for Health Sector Development. In 2002, Government adopted a ten-year health policy strategy (2002-2011). Its main objectives are to further improve access to health services facilities (from 47 percent in 2000 to 80 percent in 2011) and to reduce the incidence of infectious diseases, by promoting new approaches, including preventative behaviors. To make this strategy more operational, Government adopted a five-year development plan for the sector in January 2006 and the Bank approved a US$35 million IDA credit for the Institutional Strengthening and Health Sector Support project to support a sector-wide approach project (SWAP) that also covers reproductive health and malaria services. Through the RSRCs, the Bank is also working with Government to consolidate and enhance its reform efforts in the health sector designed to contribute to the following three strategic areas: (i) improve the effectiveness of health services provided through appropriate management of human resources; (ii) improve the efficiency of basic health services provided through appropriate financing of the sector; and (iii) improve the access to basic health services. The Bank has also provided to Niger a $25 million IDA Grant for a multi-sector HIV/AIDS project approved in April 2003.

8. Population. Niger’s ability to reduce poverty levels and to meet the MDGs is constrained by its high rate of population growth, estimated at 3.3 percent per annum. Aware of the need to manage demographic dynamics, the government created in March 2007, a new Ministry of Population and Social Reform. The government also adopted in February 2007 a National Population Policy¹⁸. At the government’s request, a multi-sector demographics operation was prepared and negotiated by the Bank to address the challenge of rapid population growth. The Project was approved by the Board on June 19, 2007 for an amount of US$10 millions. As part of the project, the government would launch a communication and sensitization strategy to build national consensus on issues related to improve the status and protection of women and to reduce fertility rates. In addition, the RSRCs will also promote the: (i) launch of information and awareness campaigns on premature marriage and family planning; and (ii) the implementation of action plans to improve the status of women, including organizing a national forum to build consensus.

9. Poverty monitoring. The Bank worked closely with the government to prepare a poverty profile that served as the basis for the PRSP poverty diagnosis. While this diagnosis was considered thorough and comprehensive by the Joint Staff Advisory Note (JSAN), it is outdated as it is based on household survey data from 1993. Updating the existing database is a priority for the Government which recently completed a nationwide census. Preparation of a new household survey, to be partially funded by the government and the Bank, was launched in April 2007 and is expected to be completed in May 2008. A Demographic and Health survey was completed in February 2007. Results showed encouraging improvement of health indicators (infant and child mortality decreased by 34 percent and 28 percent respectively). The Bank-financed Core Welfare Indicators Survey (CWIQ) was completed in May 2006 with a validation workshop held in Niamey. It provides updated social indicators which are needed for the PRSP update and assessment of progress towards PRSP targets.

10. The Bank, together with other donors, is also advising the authorities on strengthening institutional arrangements for the monitoring and evaluation of poverty trends in the context of the PRSP, especially by enhancing the capacity of the National Statistics Institute (INS). In that context, under the RSRC-1, the legal framework required for INS functioning was strengthened last December 2006 with the adoption of personnel status by a Bill signed by the Minister of Economy and Finance following the appointment by decree of the INS Board President. With this new legal framework, the INS now has an autonomous personnel payroll scheme in place and the authority to select and hire technical staff without MEF approval. Finally, the INS has prepared the multi-year statistical development plan (2008-2012) to program its activities in the medium-term and secure the requisite financing which was validated by the National Statistical Council in September 2007 and adopted by government Decree on January 16, 2008.

11. In addition, the Bank has financed the revision of the 2001 Participatory Poverty Assessment (PPA) as a contribution to the government’s efforts to update and strengthen the knowledge base on poverty and social development.

C. Areas where Bank and Fund share the lead

12. Poverty reduction strategy. Together with other external development partners, the Bank and Fund have jointly provided assistance to the government in the preparation and updating of its PRSP and the preparation of the Brussels Round Table on PRS financing. Since its completion, both institutions have jointly advised the authorities on the refinement and implementation of the strategy. The four progress reports on the implementation of the PRSP have been prepared with the assistance of the Bank, the Fund and other development partners.

13. Food Price Increase. Food prices increased by 15.5 percent in March 2008 compared to the previous year; of which cereal prices increased by about 25 percent and cooking oil by about 27 percent. Niger has suspended the VAT and customs duties on rice imports for three months in an effort to alleviate the impact of the increase in food prices on consumers. Niger imports annually about 160,000 tons of rice, with fiscal revenues estimated at CFAF 9 billion (US$21 million). The Bank is working with the government to restructure the ongoing projects in relevant sectors to help mitigate the short-term impact of the food price increases and support community efforts to increase agriculture production over the medium-term.

14. Debt sustainability. In April 2005, the Executive Boards of the Bank and Fund endorsed a joint framework for Debt Sustainability Analysis (DSA) in low income countries. A joint Bank/Fund DSA under this framework was completed in December 2006 and updated in October 2007. The DSA indicates that Niger’s risk of debt distress is moderate thanks to significant debt reduction achieved in the context of the HIPC Initiative and the Multilateral Debt Relief Initiative (MDRI). Niger is receiving 100 percent debt cancellation from the IMF and IDA under the MDRI, which will free up some US$30 million per year over the next decade. Staff assessed that despite low current levels of debt, Niger remains at moderate risk of debt distress over the medium and long term. The results of the DSA underscore the need for the authorities to pursue prudent debt policies, seeking maximum concessionality, combined with sound macroeconomic management and export diversification. The urgent need to build technical and institutional capacity for debt management has been stressed by the Bank and the Fund. Several measures aiming to strengthen the external debt unit were implemented as structural benchmarks under the previous PRGF. Bank and Fund staffs have also supported the external evaluation of the use of HIPC resources under the President Special Program. As agreed in the Bank’s Public Expenditure Reform operation (PERCG), the government integrated HIPC resources into the human development sectoral expenditures included in the 2006 Budget Law and is in the process of expanding this to rural development expenditures following completion of the rural sector MTEF in June 2006 and the elaboration of sector Program Budget.

15. Budgetary and public expenditure reforms. Strengthening public finances is a prerequisite for success of Niger’s broader reform agenda. The Bank and Fund share the lead in this area. Both institutions have played key roles in helping the government reduce domestic and external arrears. While the Fund is leading the dialogue on revenue-enhancing measures, the Bank is concentrating its efforts on budgetary reforms, in particular in the area of public expenditure, accounting and cash management system. The Fund with the support of West AFRITAC is also providing key contributions to improve budgetary processes: a number of important measures, such as preparation of budget review laws and computerization of budgetary expenditure, have been included as structural benchmarks in the previous PRGF arrangement. In 2004, the Bank prepared jointly with the government, EU, AfDB and France a comprehensive assessment of Niger’s Public Expenditure Management Systems and Capacities (Public Expenditure Management and Financial Accountability Review: PEMFAR). In addition, a “Code de Conduite” on Public Finance was adopted in March 2007 by the government. The Bank has supported budgetary reforms through five adjustment operations (PEAC I, PEAC II, PERCG, RSRC I and RSRC II). Consolidating and deepening these reforms (based on the PEMFAR priority action plan) was a critical objective of the RSRC I & II. The Country Procurement Assessment Report (CPAR) was updated in 2004. Also in March 2007, the government adopted a new procurement code consistent with the WAEMU guidelines and the Bank is providing TA in coordination with other donors to enhance the capacity of the different public procurement bodies.

16. Financial sector reform. The government launched a comprehensive financial sector reform program in 2002. Supported by the Financial Sector Technical Assistance Loan approved in February 2004, the program covers the regulatory and legal environment, the banking sector, micro-finance, postal financial services and social security. Some progress has already been realized. Two commercial banks, BCN and BINCI and three insurance companies were restructured and recapitalized. Audits of all major micro-finance institutions have been completed and restructuring plans for the post office have been drawn. Decision was made in September 2007 by the regional council of ministers to raise the minimum capital required for banks (from CFAF 1 billion to CFAF 5 billion) and quasi banks (from CFAF 300 million to CFAF 1 billion) with the aim of improving the solvability of financial institutions and their resilience to crisis. In the next two to three years, measures will be taken to improve the legal and judicial environment (modification of legislation for the issuing of land titles, improvement of the legal framework for the taking of guarantees, training of magistrates, etc.). The privatization of the Housing Bank (CDN) should have been either privatized or liquidated by end December 2006 but the government requested to extend the deadline for the privatization process to be completed by end-March 2008. Some progress has been made in the process. Based on its adviser’s assessment and proposed options for privatization, the government published in December 2006, an international tender to privatize CDN to a strategic investor. Five (5) bidders were qualified. The local Community Lending Bank (CPCT) should be restructured. Micro-finance institutions will be restructured on the basis of the results of the audits, and the supervisory unit at the Ministry of Finance and Economy will be strengthened with the creation of a Microfinance Institutions Regulation Authority by decree on April 6, 2007. The post office was split into two entities in 2005, Niger Post, for pure mail transactions, and FinaPoste, a financial services affiliate. Finally, an actuarial audit was conducted of the CNSS, the social security institution.

17. Civil service reform and decentralization. The reform and modernization of the civil service is an important element of Niger’s PRSP, yet there has been little progress in this area so far. The authorities are currently making an effort to put in place an integrated civil service database. By allowing a more transparent and effective management of the civil service, this database should improve control over the wage bill. Controlling the wage bill is important for maintaining fiscal balance, as recognized by the previous PRGF arrangement, which had set quantitative benchmarks for the wage bill. The planning for the implementation of the legal framework for the political decentralization of 1996 has recently gained momentum. Following the first local elections of July 2004, the government needs support with reforms to strengthen capacity at the local level and deal with the fiscal implications of decentralization. To help the government address some of these concerns, the Community Action Program and the forthcoming Local Urban Infrastructure Development Project (planned for FY08) will help build capacities in rural communities in planning, implementing, and monitoring micro-development projects.

18. Extractive Industry Transparency Initiative (EITI): Niger expressed its adhesion to EITI at the March 2005 London Conference after the endorsement of the initiative at the Council of Ministers. Niger has since been working on a draft institutional setup for EITI implementation which is expected to include: i) a management council composed of the main ministers involved in the administration of extractive industries in Niger and headed by the Prime Minister, ii) the consultative council including representatives of the partners for implementation i.e. the public institutions, the civil society and the companies, and iii) a permanent secretariat headed by the EITI implementation supervisor. A national workshop took place on September 6-7, 2006 to launch the initiative in Niger and was chaired by the Prime Minister. Niger is a full member of EITI since August 2007, with the appointment of the EITI Permanent Secretary and the validation of the action plan. The Bank plans to support the country to broaden the focus on EITI revenue transparency agenda by covering the entire breadth of resource chain, from extraction, to other stages such as processing, managing revenues and promoting sustainable and efficient use of public resources.

D. Areas in which the Fund Leads

19. Macroeconomic management. The main objectives of Niger’s macroeconomic program, as stated in the PRSP, are to ensure economic and financial stability while promoting sustainable and robust growth. The Fund is supporting this program through its PRGF framework by providing financial and technical assistance, as well as through dialogue on macroeconomic policy reforms. The program has made satisfactory progress since approval of the first PRGF arrangement in 2000 by achieving most of its benchmarks and overall positive fiscal performance. A second PRGF was approved in January 2005 and five reviews were successfully completed to date. The sixth review will be discussed at the Fund Board by end-May 2008 together with a new PRGF arrangement. In the context of the macroeconomic framework underlying the PRSP, the Bank has provided technical assistance in building capacity in the Ministry of Finance and Economy to monitor economic performance; elaborate MTEF and Program Budget in key sectoral ministries (Education, Health and Rural Development); and macroeconomic modeling.

20. Fiscal policy. Fiscal consolidation is a key objective of the PRGF and is supported by a number of performance criteria and benchmarks. Increasing budgetary revenue in order to progressively lower the government’s reliance on external assistance is particularly important, given Niger’s low level of revenues, compared with regional partners in WAEMU. In terms of expenditures, the Fund is mainly concerned with overall budget envelopes, while the Bank focuses on inter and intrasectoral allocations and protection of key expenditure items in Education, Health and Rural Development.

21. Monetary policy. The Fund leads the policy dialogue on monetary policy, which is set by the regional monetary authorities (BCEAO).

E. World Bank Group Strategy

22. The Bank’s most recent Country Assistance Strategy (CAS) covered the period 2003 to 2005 and was approved by the Bank’s Board in January 2003. It supports the implementation of the PRSP. A new CAS is under preparation and will be discussed at the Board on May 29, 2008.

23. As of April 28, 2008, the World Bank’s lending portfolio in Niger consisted of eleven IDA active operations, with a total commitment of US$315.9 million, of which US$120.8 million is undisbursed. IDA assistance has helped reduce the volatility in ODA by compensating short-term declines in assistance from other partners, in particular throughout two Rural and Social Reform Credit and Grant. IDA has also been responsive to regional exogenous shocks that have implications for Niger. For instance, an Africa Emergency Locust Project (AELP) aiming at fighting the locust’s infestation in West Africa was delivered in FY05 and a Niger Avian Influenza Control and Human Pandemic Preparedness and Response Activities program (Component F of the Community Action Program) was approved by the Board on December 18, 2007. A Health sector SWAP and RSRC 1 were delivered in FY 06. IDA assistance to Niger in FY07 was 100 percent on non-repayable grant terms. Additional IDA Financing of $10 million (Grant) was provided for the Water Sector project in July 2006. In FY07, the Bank has delivered two additional projects, RSRC 2 ($50 million IDA Grant of which 25 millions were disbursed in August 2007) and the Multi-sector Demographic Project ($10 million IDA Grant), both approved by the Board on June 19, 2007. Within a medium-term framework, and building on the previous three budget support operations as well as ongoing investment projects in agriculture, education, and health, the RSRC series focus on helping the government overcome policy constraints and institutional bottlenecks in: (i) public sector management; (ii) growth and agricultural development; and (iii) human development, including demographic growth and gender issues. Going forward, the RSRC series will shift to support the accelerated and shared growth agenda, in particular to support policy reforms in the area of infrastructure and private sector development, the Growth Support Budget Financing of about US$30 millions will be delivered by end-October 2008.

Table 1:

Niger Status of World Bank Portfolio

(all IDA) (In millions of U.S. dollars, as of April 28, 2008)

Table 1:

Niger Status of World Bank Portfolio

(all IDA) (In millions of U.S. dollars, as of April 28, 2008)

	Commitment
	Amount		Approval	Closing
	(US$ millions)	Undisbursed	Date	Date
Rural and Social Sectors Reforms Grant II (RSRC II)	50.0	25.0	19-06-07	30-06-2008
Multi-Sector Demographic Project	10.0	9.9	19-06-07	31-03-2013
Niger Basin Water Resources Development and Sustainable Ecosystem Management project	15.0	14.9	03-07-07	31-01-2013
Instit. Strengthening & health Sector Support Program (ISHSS)	35.0	30.3	05-01-06	30-01-2011
Locust Emergency	9.9	5.0	16-12-04	30-06-2009
Water Sector	48.0	8.9	03-05-01	31-12-2008
Private Irrigation Promotion	38.7	2.3	19-03-02	31-12-07
Community Action Program	39.5	0.4	20-03-03	30-06-2010
Basic Education	30.0	7.5	17-07-03	31-12-2007
Multi-sector STI/HIV-AIDS	25.0	7.7	04-04-03	30-06-2008
Financial Sector TA	14.8	8.9	19-02-04	30-04-2008
TOTAL	315.9	120.8

View Table

Table 1:

Niger Status of World Bank Portfolio

(all IDA) (In millions of U.S. dollars, as of April 28, 2008)

	Commitment
	Amount		Approval	Closing
	(US$ millions)	Undisbursed	Date	Date
Rural and Social Sectors Reforms Grant II (RSRC II)	50.0	25.0	19-06-07	30-06-2008
Multi-Sector Demographic Project	10.0	9.9	19-06-07	31-03-2013
Niger Basin Water Resources Development and Sustainable Ecosystem Management project	15.0	14.9	03-07-07	31-01-2013
Instit. Strengthening & health Sector Support Program (ISHSS)	35.0	30.3	05-01-06	30-01-2011
Locust Emergency	9.9	5.0	16-12-04	30-06-2009
Water Sector	48.0	8.9	03-05-01	31-12-2008
Private Irrigation Promotion	38.7	2.3	19-03-02	31-12-07
Community Action Program	39.5	0.4	20-03-03	30-06-2010
Basic Education	30.0	7.5	17-07-03	31-12-2007
Multi-sector STI/HIV-AIDS	25.0	7.7	04-04-03	30-06-2008
Financial Sector TA	14.8	8.9	19-02-04	30-04-2008
TOTAL	315.9	120.8

24. The Bank’s AAA program helps the government in areas such as poverty analysis, gender, population growth, sources of growth, and the Millennium Development Goals (MDGs). The AAA program also aims at reinforcing public sector capacity in pursuit of the PRSP’s objectives and in preparing Niger to transition to consolidate programmatic lending. In support of these objectives, sector work on population, rural development, public expenditure management and financial accountability review (PEMFAR), CPAR, and Participatory Poverty Assessment have been completed. A Country Economic Memorandum (CEM) focusing on accelerating growth and achieving the MDGs in Niger was prepared in FY06 and finalized with comments from the government of Niger and is expected to be disseminated in October 2007. The draft chapters of the Diagnostic Trade Integration Study were discussed together with the final report of the Investment Climate Assessment at a national workshop held in Niamey on June 26-27, 2007. The ICA report portrayed a negative environment for the private sector in Niger; however the government is taking corrective measures to improve the business environment with TA from donors. To help the government reduce vulnerability to food insecurity and develop a comprehensive social protection strategy, the Bank is preparing a sector work on food security and social protection for Niger. Finally, the Bank is preparing a Public Expenditure Tracking Survey (P.E.T.S.), initially in the education and health sectors. The objectives of the P.E.T.S. is to improve the efficiency of public spending in social sectors and enhance the social sector outcomes by tracking leakages, execution rate, and delays of public spending as well as document administrative procedures.

25. The Bank is committed to enhancing external partnerships and donor harmonization within the framework of the Government’s efforts to mobilize and coordinate donor support under the PRSP. In addition to the strong partnership with the Fund, the Bank is collaborating with a number of donors in different areas, including the European Union (EU), the African Development Bank (AfDB), the United Nations Development Program (UNDP), and key bilateral donors.