4.3.3 NIGER'S DEPENDENCY
Food aid is only the tip of the iceberg of Niger's dependency.
The Nigerien economy has also become more dependent on foreign capital,
economic assistance, and credit, and the forms these dependencies have taken
have given foreign actors an extraordinary degree of influence in the Nigerian
policy process foreign aid to Niger has constituted a substantial but widely
fluctuating portion of the country's national budget. Initially, the government
of Niger was highly dependent on the French for aid, and overall aid averaged
60 percent of total budget expenditures between 1960 and 1967. This level of
aid fell in the late 1960s, only to rise dramatically in the 1970s as a result
of the drought relief effort. During the period 1975-1981, the level of aid
fluctuated between 45 percent and 75 percent of the national budget. It then
fell, only to jump sharply as the combined effects of the threat from Libya,
international debt recovery policies known as «structural
readjustment», and renewe3d drought pressed the regime to the wall. In
1985, aid exceeded the total value of the national budget by 135 percent.
21
Even the normal types of foreign assistance technical
assistance and investments for specific development projects pose problems for
autonomy. In Niger, such aid is usually accounted for in the «investment
budget». With the exception of the period from 1977 to 1982, the
government of Niger has had to rely heavily on foreign aid to carry out its
economic development program. Although, it has viewed this aid as vitally
important, aid dependency has limited the Nigerien government options in a
number of ways. Nearly, all aid to Niger from its principal donors, France and
other European community countries, is tied to the purchase of commodities from
those countries. U.S. aid has followed generally this pattern as well. This
condition obviously limits Niger's choice of suppliers and affects its patterns
of trade. Foreign actors have also played a major part in defining Niger's
development policies, and his influence has carried serious future budgetary
implications. For example, the recurrent costs of rural development projects
designed and financed by just one secondary donor, the U. S., equal the entire
budget of Niger's ministry of Rural Development.
Other types of foreign aid, particularly direct budget
subsidies, create much more obvious sources of foreign influence and control.
In the years immediately following independence nearly 10 percent of the
Nigerien government's direct operating budget came from French foreign aid.
This type of aid was phased out by 1970, but it was resumed in 1973 - 1974 and
1985. Recently, Niger has received «sector grants», or no project
aid, from the U.S government. U.S.A.I.D's $29 million Agriculture and Rural
Development Sector Grants had as their explicit goal producing major changes in
the Nigerien government's farm subsidy, credit, price, and marketing policies.
In exchange for this budgetary support, Niger was expected to liberalize and
privatize its rural economy.23 Clearly, Niger's financial was have
made its government highly susceptible to foreign policy prescriptions at
various points in its history since independence.
The only way in which the government of Niger has been able to
mitigate its aid dependence somewhat has been to diversify its donors. Niger
still remains highly dependent on France, but beginning in the late 1960s a
larger proportion of its aid began to come from such multilateral donors as the
European Community's Fund for Economic Development, the World Bank, the United
Nations, the African Development Bank, the Arab Bank for Economic Development,
and the organization of Petroleum Exporting Countries' (OPEC) special fund.
Niger has also been able to attract several significant new bilateral donors,
the most important of which are Canada, West Germany, U.S, the Peoples Republic
of China and Saudi Arabia.24
Although, diversification of aid has reduced Niger's
dependency on any single donor, its effects should not be overstated. France
continues to be the largest single bilateral donor, consistently contributing
between 27 percent (1977) and 47 percent (1981) of all such aid, and annual aid
negotiations with France remain a critical event in Niger's political and
economic life. Other western donors while less important individually, are
usually associated in groups, such as the Development Assistance Committee of
the Organization of Economic Cooperation and Development and the friends of the
Sahel, and these groups have brought effective pressure on the Nigerien
government to adopt major changes in rural development policy, as was very
evident at the 1982 national seminar in Zinder.
A second problem with Niger's trade has been its dependence on
a single buyer, France. In the 1960s, Niger sold 60 - 70 percent of its exports
to France; France in turn supplied about half of Niger's total imports. Through
the 1970s, France continued to buy nearly 60 percent of Niger's exports and to
sell it 35 - 45 percent of its imports. Niger has attracted only two additional
major buyers for its goods, Nigeria and Libya. Most of Niger's exports to
Nigeria have been agricultural commodities and livestock, and Nigeria has
become a significant regional supplier of energy and manufactured goods to
Niger as well. Trade with both Nigeria and Libya, however, has been interrupted
periodically for political reasons, which has contributed to the weakness and
dependency of the Nigerien economy.
Direct foreign private investment has been a less obvious
source both of growth and of dependency in Niger, largely because, with the
exception of investment in the uranium mines, there has been so little of it.
In the late 1970s and early 1980s, however, private and publicly guaranteed
capital did partially replace aid as a source of capital. During the uranium
boom years in the second half of the 1970s, the government of Niger borrowed
heavily, mainly to finance investments in mining and infrastructure. When
uranium revenues tumbled and imports to develop these investments continued the
debt skyrocketed. In the early years of the republic, foreign debt had been
kept to a low level, and debt service, or the amount of money needed simply to
keep loan repayments current, never exceeded 4 percent of export earnings. From
1970 to 1987, the outstanding long-term public grew from 5 to 72. 6 percent of
the Gross Domestic Product (GDP) and by 1986, the government owed or had
guaranteed nearly $1.68 billion in long-term and short-term indebtedness - when
Niger's total GDP was only $2.16 billion.25
In the mid 1980s, Niger's debt service approached one-third of
the value of its exports, or about half of the government total revenue, an
unrealistic level of burden for such a slowly growing economy. The level of
dependency on foreign lenders, coupled with Niger's inability to pay,
precipitated a debt and foreign exchange crisis, which opened the way for
lenders to virtually dictate Niger's internal economic policies.
During the boom years, president Kountché had expressed
his disdain for the International Monetary Fund,26 but faced with a
critical shortage of foreign exchange, he was forced to negotiate a series of
«standby agreement» totaling $62 million in IMF currency units
(Special Drawing Rights, or SDRs). In addition, Niger was obliged to obtain new
loans from the World Bank and to secure agreements for rescheduling existing
debt with groups of its creditors in the Paris and London club. These
arrangements made it possible for the country to continue importing vital
commodities and to reduce debt payment to one-third, the level of government
revenues. They also, however, came with conditions, which require reduction in
government spending, comprehensive changing in tax law, and a liberalization of
the economy by reducing the number of state -owned and mixed public-private
enterprises. Although, in the long run, they imply political risks and
represent new sources of dependency. Furthermore, unless these changes
stimulate a major recovery in the value of Niger's exports, they will only buy
time, since Niger's debt has not been forgiven. It has merely been stretched
out into the future.
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