Niger

Country Summary

Macroeconomic performance

Real GDP growth was an estimated 5.2% in 2018, up from 4.9% in 2017, reflecting stronger performance of the agricultural sector. On the demand side, final consumption grew by 4.5% in 2018, and investment, by 11.7% (compared with 2.4% in 2017). The GDP structure remains relatively stable, with agriculture ominating (43.4% of GDP in 2018), followed by services (35%), and industry (14.9%). Despite public finance consolidation, the fiscal deficit stood at an estimated 5.9% of GDP in 2018. Consumer price index inflation was an estimated 4.2% in 2018, reflecting an expansion in credit and money supply in the context of a contraction in net foreign assets.

The economic outlook is favorable, with real GDP growth projected at 5.3% in 2019 and 5.7% in 2020. Economic activity should continue to benefit from strong performance in the agricultural sector, underpinned by the expansion of irrigated land and the development of mini-dams. The 2017–2020 Economic and Social Development Plan provides for numerous infrastructure projects, notably the Cotonou–Niamey–Ouagadougou– Abidjan rail loop, a pipeline for exporting crude oil, the Salkadamna power project, and the Kandadji combined hydro and irrigation dam.

Recovery in Nigeria should also be profitable for Niger. The effectiveness of these prospects is also subject to risks related to climate shocks, a decline in the export price of crude oil, possible delays in the pipeline construction project, and the terrorist threat in the Sahel.

Tailwinds and headwinds

Agriculture remains a priority in the country’s strategy to strengthen and accelerate economic growth. The implementation of the five-year action plan under the 3N initiative “Nigerians feeding Nigerians” is ongoing, with encouraging results in terms of improved water resources management and increased productivity and value added for agro-sylvo-pastoral and fisheries production. The country has also undertaken numerous reforms aimed at improving the business environment and gained 26 places in four years on the World Bank’s Doing Business ranking. Despite the encouraging economic performance, poverty remains high (42.2% of the population in 2017), and access to basic services (health and education) is a major challenge.

As a large landlocked country, Niger is committed to regional integration, especially in the context of the Economic Community of West African States and the West African Economic and Monetary Union. Until early 2011, Niger exported exclusively agricultural and livestock products to these two economic areas. With the export of oil since 2012, the country has diversified its exports and improved its trade balance. Niger has implemented most regional regulations related to trade, including the Common External Tariff and its accompanying measures, and made progress in implementing the World Trade Organization’s Trade Facilitation Agreement. Niger has also signed the Continental Free Trade Agreement and is a member of the G5 Sahel subregional organization set up in 2014. Niger leads the group on climate change issues and chairs the Sahel Climate Commission.

Source: African Economic Outlook 2019

Fixed Income

Issuance strategy 

Niger is a member of the eight-country regional group The West African Economic and Monetary Union (WAEMU) Generally, most programs are focused on short-term tenor and characterized by securities with repayments by amortization and deferred coupon.

The fiscal and current account deficits have contributed to increase Niger's debt ratio.For 2018, the ratio of domestic debt to GDP is estimated at 21.35% while the ratio of external debt is estimated at 60.19%.

The draft budget for the year 2020 relating to interventions on the regional financial market provides for a mobilization of XOF 175 billion in Treasury bonds.[source:finances.gouv.ne/

 

Yield curve

As part of its market development activities, the UMOA Titres Agency has carried out a project to set up issuers' yield curves of the Public Securities Market of the UEMOA zone (MTP) with objective:

  • to improve transparency on the MTP
  •  to contribute to better price formation during the auctions
  • to make investors aware of the relationship between primary and secondary markets
  • to provide local / international investors with a reference of price for securities issued by the States

The conditions for  yield curves constructions  have not yet all been observed on the (MTP). It was thus retained:

  • in the short term, to develop a first version of yield  curves taking into account the specificities of the MTP, while being sufficient evolutionary to support its development;
  • in the medium / long term, define the necessary ways and means to Continuous improvement yield curves models following the evolution of the MTP.

Niger  government securities yield curve extends to 6 years.

Yield curve calculation models 

The yield curve is constructed on the basis of primary market returns. The model used is the Nelson-Siegel Svensson .  

Interpolation methods 

Linear interpolation. 

Yield curve managed by

Agence UMOA-Titres is responsible for the yield curve. 

Display platform 

Agence UMOA-Titres website 

Challenges in building an efficient yield curve 

  • Fragmentation of the market

  • Narrow investor base: comprising homogeneous investors such as banks. 

  • Low liquid secondary market

Guide to Buying Bonds

Procedures for market participation

The primary subscription of Treasury bonds and bonds is reserved for credit institutions, management and intermediation companies (SGI) as well as regional financial institutions with a settlement account in the books of the Central Bank.

Other investors, natural or legal persons, irrespective of the State in which they are established, may also subscribe to Treasury bonds and bonds on the primary and secondary market through credit institutions and SGI. located in the territory of the Union.

Emissions on the primary market of the MTP (Marché des Titres Publics) are made by auction.Each issuance should be advertised at least 7 days before the auction by describing the issuance characteristics. Bidders submit to the Central Bank, sealed in a ballot box reserved for this purpose, a submission form specifying the amounts and the interest rates or the price offered. Submissions may also be made electronically in the conditions defined by the Central Bank.

Later than one hour after the deadline for bids submission, the National Directions of the BCEAO transmit electronically, by fax or any other means of rapid communication accepted by the Central Bank, the main submissions to the principal agency of the BCEAO, which is organizing the auction.

Treasury bills are eligible for refinancing by the Central Bank. Investors and the Central Bank may buy or sell Treasury bonds on the secondary market, awarded by private treaty. In this context, they are required to post the purchase price and sale, which they are willing to transact.

Bond issues can be done by  syndication  managed by CREPMF.[http://www.crepmf.org/Wwwcrepmf/Reglementation/pdf/Instructions/INSTRUCTION_N36_2009.pdf]

Treasury bonds can be traded on the secondary market. As such, they can be exchanged at the Regional Stock Exchange (BRVM) or outside the BRVM.

Settlement cycle

On the primary market by auction, the settlement date is T+1 of the issue date.On the secondary market, the payment of purchases of Treasury bonds and bonds by the primary subscribers is made by debiting their settlement account with the Central Bank on the value date of the issue of these securities. settlement date is the first business day following the conclusion of the transaction for domestic transactions and the third business day following the conclusion of the transaction for transactions between two (2) Member States. The Contracting Parties are free to agree on a term greater than these minima for the settlement of transactions, IF the instructions given by both parties are identical, the transaction is directly offset on the agreed value date. In the event of a discrepancy, the Central Bank suspends the transaction and notifies both parties of this decision for correction.

Taxation

Treasury bills and Treasury bonds incomes are tax-free throughout the territory of the Member States of the WAEMU. But for non-members, the tax rates are different from one country to another. In Niger, the tax rate one securities income is equal to 6%.

Rating

Rating Agency Current rating Outlook
Moody’s B3 Stable
Fitch No rating No outlook
Standard and Poor’s No rating No outlook

 

Primary Dealers

The securities market has a system of Specialists in Treasuries. The credit institutions and the SGIs  may be approved as SVT under the conditions specified by an Instruction of the Central Bank. As such, they must respect certain commitments that confer special advantages. These commitments and benefits are specified by an instruction from the Central Bank.

List of Primary Dealers

UNION TOGOLAISE DE BANQUE BOULEVARD DU 13 JANVIER NYEKONAKPOE +22822234300
SONIBANK AVENUE DE LA MAIRIE +22720734740
ECOBANK NIGER BOULEVARD MALI BERO, GARE ROUTIERE +22720737181
CORIS BANK INTERNATIONAL 1242 AVENUE DU DR KWAME N’KRUMAH +22625312323
BANQUE REGIONALE DE MARCHES Boulevard de la liberté x Rue du Benin +22720340200
BANK OF AFRICA NIGER IMMEUBLE BANK OF AFRICA DU NIGER RUE DU GAWEYE +22720733620

Market restrictions

Openness to international investors

The members of the zone are actively encouraging foreign investment. Foreign companies are free to invest and list on the regional stock exchange (BRVM), which is based in Abidjan and is dominated by Ivorian and Senegalese firms. 

Capital controls

There are no significant limits on foreign investment nor are there generally differences in treatment of foreign and national investors, either in terms of the level of foreign ownership or sector of investment.

Restriction on FX and profit repatriation

WAEMU has unified foreign exchange regulations. Under these regulations, there are no restrictions for transfers within the community, and designated commercial banks are able to approve routine foreign exchange transactions inside the community. The transfer abroad of the proceeds of liquidation of foreign direct investments no longer requires prior governments approval.

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