Niger: Telecoms sector to perform well but security threats rise

02 August 2018

Niger faces a range of security threats as the number of economically-motivated protests rises and Islamist terrorist groups expand their reach. However, there is significant growth potential in the telecoms sector.

Security Environment

High living costs and tax increases have prompted a number of recent protests in urban centres. In March 2018, 23 people were reportedly arrested during violent demonstrations in the capital, Niamey. Protester barricades in Niamey pose business interruption risks and demonstrators are likely to vandalise government buildings and private property.

However, protests are banned in the capital and security forces are likely to quickly disrupt demonstrations via the use of force and possibly live ammunition, which will pose risks to bystanders. Other urban areas that are likely to experience protests include Agadez, Arlit and Zinder.

The risk of terrorism is high, particularly in Niamey. As the focus of Islamist terrorism increasingly transitions from the Middle East to the Sahel, groups such as Islamic State in the Greater Sahara (ISGS) are likely to benefit. An increase in funding from sympathisers and the migration of fighters from the Middle East will strengthen the group’s capabilities.

In October 2017, 4 US Special Forces personnel were killed in western Niger during an ISGS attack on a US-Nigerian patrol. The volatile security environment in Niger’s neighbouring countries also poses a number of security risks. Burkina Faso has experienced an increase in terrorist attacks in recent months and there is a risk that militants will attempt to carry out similar incidents in Niger.

Boko Haram poses a terrorist threat along the frontier with Nigeria while neighbouring Mali is becoming increasingly unstable, raising spillover risks. Niger’s borders with Mali and Libya are exposed to en elevated risk of kidnap, but the risk is also high in the area surrounding Agadez, in the centre of the country.

Trading Environment

The weak security environment will weigh on Niger’s economic growth outlook. Real GDP growth is forecasted to decrease from 5.6% in 2017 to 4.8% in 2018, and ISGS and Boko Haram activity will impede the access of ground cargo to a number of Niger’s export corridors. However, the agricultural sector will be a growth outperformer as it benefits from international aid initiatives.

Falling uranium prices have undercut investment in one of Niger’s key economic sectors. Uranium accounted for 32.2% of Niger’s exports in 2016, but a number of mining companies have scaled back production.

On a more positive note, Niger’s inflation rate is low as a result of its membership of the Union Economique et Monétaire Ouest Africaine, which pegs its currency to the euro. While the peg mitigates exchange rate risks, Niger’s sovereign credit risk is elevated. Niger’s high current account and fiscal deficits will continue to increase its stock of external debt. Due to Niger’s reliance on imports, the country’s external debt stock is forecasted to rise from 43.6% in 2017 to 60.2% in 2027.

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Investment Environment

Niger’s telecoms sector is set to benefit from growing demand and robust competition between the country’s operators. While high poverty rates will remain a challenge, the mobile market is forecasted to grow from an estimated 8.5 million subscribers in 2017 to 12.9 million by 2021. In addition, Niger’s link to Maroc Télécom's fibre optic cable network will increase international bandwidth.

Niger introduced a new commercial court in Niamey in April 2016, but contractual enforcement risks are high due to prevalence of corruption and political interference in the judiciary. A longrunning dispute between Niger and Africard Co Ltd, a biometric document maker, was reportedly settled via international arbitration in July 2018. Niger had refused to pay Africard after claiming its contract had been procured by bribery.

Niger: Telecoms sector to perform well but security threats are rising
** A number of markets are currently not considering Nigerien risks.

In this month's Risk Outlook, we also provide a detailed forward looking assessment of developments within the security, trading and investment environments for Pakistan, Cameroon, Colombia and Niger all of which have been the subject of recent enquiries from JLT's client base.

World Risk Review Rating August 2018

The monthly Risk Outlook is supported by JLT’s proprietary country risk rating tool, World Risk Review (WRR) which provides risk ratings across nine insurable perils for 197 countries. The country risk ratings are generated by a proprietary, algorithm-based modelling system incorporating over 200 international sources of data.

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For further information, please contact Eleanor Smith, Senior Political Risk Analyst on +44 (0)121 626 7837 or email eleanor_smith@jltgroup.com.

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