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Financial Sector Overview

Economic Context

Niger is one of the least developed economies in the West African region and globally. In the Human Development Index (HDI) and global rankings, Niger ranked 187th out of 188 countries in 2017. It is plagued by a dire shortage of basic infrastructure. Moreover, it has a high birth rate and a predominantly youthful population, both being factors that increase its social and economic needs. However, the country’s abundant mineral reserves constitute an opportunity for industrial development in the medium and long terms. Niger is the fourth largest producer of uranium in the world and began its oil production in 2012. The secondary sector contributed 17% to GDP in 2017. Although it remains heavily dependent on rainfall, the agricultural sector is the largest employer of the labour force and contributed 38% on average to GDP between 2014 and 2017. In recent years, public investment spending has increased public debt, whose ratio to GDP rose from 33.7% to 51.1% between 2014 and 2017. Lastly, in tandem with commodity price fluctuations, the security climate, disrupted by the presence of terrorist groups in neighbouring countries and in border areas, also makes it difficult to control public spending.

Financial Sector Overview

As a member country of the West African Economic and Monetary Union (WAEMU), Niger shares a common currency, a single central bank (BCEAO) and a set of legal and institutional arrangements with Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Senegal and Togo. These financial institutions interact within a harmonised framework under community structures that regulate and supervise the sector as a whole. BCEAO regulates banks, financial institutions "of a banking nature" and large Microfinance Institutions (MFI). The other MFIs are supervised by a dedicated unit of the Ministry of Finance. The insurance and capital markets sectors are regulated and supervised by the Inter-African Conference on Insurance Markets (CIMA) and the Regional Council for Public Savings and Financial Markets (CREPMF), respectively. Finally, the Inter-African Conference on Social Insurance (CIPRES) regulates and supervises the national pension system.

The banking penetration rate in Niger is only 6.3%, which is the lowest among the eight WAEMU countries. The main actors in the Nigerien financial sector are commercial banks, which were 12 in 2016, as well as three specialised financial institutions of a banking nature. The volume of bank assets was about 32% of GDP in 2016, or CFAF 1,392 billion. The banks are supplemented by MFIs, which mainly cater to the low- and modest-income population, including those in (peri)urban and rural areas. The market share of MFIs was estimated at CFAF 37.5 billion in 2016, or 8.4% of GDP for the same year. These cover 10.9% of the adult population, while the overall penetration rate of financial services was 24.1% in 2016. The penetration rate of mobile money and insurance services remains rather low and the regional financial market is used mainly by the national public treasury, to the detriment of private sector firms. Only the branch of the BOA banking group is listed on the regional market of the Regional Stock Exchange (BRVM).

Banking Sector

Banking Market Structure – Although it is the main provider of financing in the economy, the domestic banking sector is marginal within the WAEMU market, accounting for only 4.3% of total assets in the subregion. The three main banking groups have a predominantly African shareholding. These are Bank of Africa (BOA), SONIBANK and ECOBANK, which posted balance sheet figures of CFAF 287 billion, CFAF 263 billion and CFAF 225 billion, respectively. 

Credit Structure and Bank Deposits – Outstanding loans to the economy increased from CFAF 617 billion to CFAF 801 billion between 2014 and 2016, representing an average annual increase of 14% over this period. About a quarter (26.6%) of loans are devoted to financing businesses’ cash-flow needs. Just over half (51.5%) of financing is allocated to consumer spending. Given the scale of investment needs in infrastructure and in key growth sectors in Niger, banks have been urged to finance more private investments. Bank deposits fell between 2014 and 2016, due to the decline in the contribution of households.

Interest rates During the same period, banks increased the lending rates applied to deposits from individuals, who represent most local customers, in order to reverse the decline in collected savings. Niger has a borrowing rate that is relatively higher than the WAEMU average. Although this rate fell between 2015 and 2016, it stood at 9.9% in 2016 in Niger, while in Côte d’Ivoire and Senegal, the biggest WAEMU economies, it fluctuated between 5% and 6%.

Financial Strength of the Banking Sector – Non-performing loans increased by 80% between 2015 and 2016 to stand at CFAF 53 billion, without significantly affecting profitability: the sector’s profits and net banking income reached CFAF 23.4 billion and 92 billion, respectively, in 2016. Banks’ net equity increased slightly (+6.6%) over the period.

Financial Inclusion

The financial inclusion rate in Niger stood at 15.5% in 2017, while it was only 6.7% in 2014. Even though the country has more than doubled the level of access to financial services in three years, its performance is well below the averages for sub-Saharan Africa and low-income countries, which reached 42.6% and 34.9%, respectively, in 2017. Financial inclusion in Niger has historically been driven by mutualist or cooperative-type MFIs. Digital financial services have a vastly under-exploited potential for ensuring the expansion and accessibility of rural financial services.

Microfinance Sector

As in the other WAEMU countries, savings and credit cooperatives or mutualist structures play the role of pioneers in microfinance. The recent development of specialised structures that have taken the legal format of a public limited company (PLC) has also helped to improve the range of services offered by microfinance institutions (MFI), although they remain rather unevenly distributed throughout the national territory. Indeed, two PLCs – Asusu and Taanadi – dominated the sector in 2015, with a microcredit portfolio that covered more than half of the national market. Niger had 40 MFIs in 2016, whereas there had been 112 entities in 2007. This decline in the number of MFIs stems from the tightening of certain regulatory provisions of the 2007 Law on Microfinance in WAEMU which, in turn, negatively impacted the development of branch networks and even the sustainability of some MFIs. Nevertheless, the sector handles a significant proportion of financial activities, with MFIs collecting CFAF 24.4 billion in deposits and granting CFAF 28.7 billion in loans. The microfinance sector accounts for 59% of the financial services usage rate in Niger.

Digital Finance

In Niger, as in WAEMU, access to digital financial services is mainly driven by mobile money, whose growth is strongly correlated with the mobile telephony penetration rate, estimated by the regulatory authority (Niger Telecommunications and Postal Regulatory Authority - ARTP) at 45.5% in 2018. Nevertheless, with only 2.2 million mobile money account subscribers, representing 10% of the potential market, Niger has the lowest mobile money performance within WAEMU, in terms of accessibility (6% of the regional market) and population size. The national electronic money regulatory framework was adopted in 2006 and updated by BCEAO in 2015.

Furthermore, data on financial inclusion shows that in 2016, only 3% of adults had mobile money accounts and 13.2% of these accounts are actively used. The availability of automatic teller machines (ATM) is very low: about 54 ATMs are available for 100,000 inhabitants.

Migrant Remittances

In Niger, money transfer is an activity devolved to credit institutions, decentralised financial systems and the financial services of the Post Office. In addition to creating jobs, these financial institutions contribute significantly to the country’s economic development and facilitate banking services for State employees in areas where such services are non-existent. Money transfer is subject to prior authorisation issued by the Ministry of Finance or an order from a local bank.

Insurance Sector

Niger is a member of CIMA, which regulates and supervises the insurance sector in 14 member countries. Two life insurance and six non-life insurance companies share the market. The insurance sector remains poorly developed in Niger. The total assets of insurance companies accounted for about 1% of GDP in 2013 and the collected life and non-life insurance premiums accounted for 0.11% and 0.6%, respectively, in 2015. In sub-Saharan Africa (excluding South Africa) in 2014, insurance assets accounted for about 4.1% of GDP, while life and non-life insurance premiums constituted 0.8%.

Capital Market

The capital market is driven mainly by sovereign bond issues and only the Nigerien subsidiary of a subregional banking group (BOA) is listed on the BRVM.

Housing Financing

The development of this sectoral niche is hampered by the low average incomes in Niger. The limited real estate market and the banking sector’s inability to raise long-term financing do not encourage the development of a domestic mortgage market. According to the Centre for Affordable Housing Finance in Africa (CAHF), mortgage arrangements are very often guaranteed by employers and limited to employees of the formal sector and international organisations. The interest rates applied range from 6.5% to 9% with a maturity of up to 20 years. Only 6% of households can afford low-cost housing.

Social Insurance System

The pension system is managed by two institutions, namely: the National Retirement Fund (FNR), reserved for civil servants; and the National Social Security Fund (CNSS), which pays old-age benefits to formal private sector workers, employees of parastatal structures and public sector contract workers who do not have civil servant status. The contributory pension system in Niger covers only 3% of the labour force, while the dependency rate deteriorates due to the limited creation of new posts in the public administration and the expansion of the informal sector. To address these shortcomings, a sector reform project was initiated by the government, in partnership with the World Bank, which resulted in the merger of the public and private pension schemes into a single institution called the Autonomous Pension Fund of Niger (CARENI).










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At a Glance

At a Glance Source
Population in thousands (2019): 23,310.71
GDP per capita (current US$) 2019 - World Average 10,721.61: 554.60
Account (%) age 15+) - (2014 vs 2017): 7% | 16%
Agriculture Orientation Index - Credit ( Agriculture, Forestry and Fisheries share of GDP) (2015 vs 2016): 0.01 (2015)
Financial Inclusion Strategies: • Stratégie Nationale de la Finance Inclusive (SNFI) 2018-2020 (published Feb 2018) FR• La Stratégie régionale d’inclusion financière dans l’UEMOA (published 2016) FR
Domestic credit provided by financial sector (% of GDP) 2017: 21.43
Made or received digital payments in the past year (% age 15+) (2014 vs 2017): 5% | 13%
Remittances % of GDP for 2017: 0.031
Mortgage Interest Rate / Mortgage Term (years): 10.50% | 9

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