I’ve been following Niger’s recently launched five-year, $2.5 billion Security and Development Strategy (SDS). The program aims to address economic grievances in the north and across the country while bolstering security, all in the hopes of avoiding the chaos that plague Mali currently and avoiding a repeat of rebellions Niger has faced in the past.
One of the key questions facing SDS is how to fund it. The European Union has pledged $118 and other foreign partners will presumably contribute. Yet much of the funding, it seems, is expected to come from the Nigerien government itself. Some of that funding, in turn, is expected to come from rents derived from oil production and uranium mining.
That’s why the headline “Niger Cuts Budget by 7% on Oil Revenue Shortfall” caught my eye:
Niger, one of the world’s newest oil-producing nations, has reduced its 2012 budget by nearly 7 percent to 1.35 trillion CFA francs in response to lower government income.
The revision is the third since the budget was adopted late last year and is due largely to projected shortfalls in customs duties and revenues from its energy sector.
The government increased spending by 10 percent in July to cope with drought and conflicts along its porous borders, including an Islamist occupation of northern Mali.
According to [a televised government] statement, state oil profits for the year were expected to reach 4 billion CFA francs, far short of an earlier projection of 33.5 billion CFA francs.
According to this converter, the revised budget comes out at around $2.7 billion. For comparison’s sake, a fifth of SDS’ projected budget (i.e., the rough amount the government would spend on the program each year for five years) is $0.5 billion. That’s a big expenditure in this context. And if oil revenues fall short of expectations, it may be hard for the government to fund SDS on the scale of its ambitions – great though the need for the program is – without making sacrifices in other areas or securing more outside assistance.