This note presents an analysis of Niger’s financial system, assesses its depth and reach as well as its soundness and vulnerabilities.


This note presents an analysis of Niger’s financial system, assesses its depth and reach as well as its soundness and vulnerabilities.

This note presents an analysis of Niger’s financial system, assesses its depth and reach as well as its soundness and vulnerabilities.

1. Niger’s shallow financial system is dominated by the banking sector. Despite some progress, the level of development of Niger’s financial system remains below peers’. Overall, the level of financial depth, proxied by broad money (M2) to GDP, is among the lowest in the world at 23 percent in 2012 against an average of 37 percent in Sub-Saharan Africa. The system consists of ten banks,2 one financial institution, 49 registered microfinance institutions, several postal offices providing financial services, five insurance companies, the national social security fund (Caisse Nationale de Sécurité Sociale - CNSS), one brokerage firm, and one branch of the WAEMU regional stock exchange. At the end of 2009, the total assets of these institutions amounted at about 660 FCAF billions, of which about 80 percent corresponding to the banking sector (93 percent excluding the CNSS).

2. Niger’s banking sector’s characteristics lag behind other developing countries’ (Figure 1). Niger’s banking sector’s total assets are the second smallest in the WAEMU.3 In 2012, bank credit to the private sector accounted for only 14 percent of GDP while the deposits to GDP ratio was 11.8 percent. Penetration of bank services is also low: the estimated share of population with a bank account amounts to merely 1.5 percent,4 and the range of products offered by the banking sector is very limited. For instance, from publicly available information there is no indication of provision of leasing and factoring services to SMEs in the country.

Figure 1.
Figure 1.

Niger: Financial Depth and Inclusion

Citation: IMF Staff Country Reports 2015, 064; 10.5089/9781498323789.002.A010

Sources: World Bank database; FinStats; and Findex

3. Distribution of banks’ credit shows limited support to the private sector (Figure 2). The share of credit directly granted to the public sector or to semi-public enterprises is limited to approximately 20 percent of the total. Loans are mainly extended to the extractive industry, commerce, and transport. The allocation of credit also reflects the banking sector’s focus on corporate rather than on small and medium-sized enterprises, as proven by the large exposure to few borrowers.5 This credit distribution doesn’t reflect the relative importance of the various sectors’ contribution to the economy. For instance, agriculture and livestock sectors contribute for more than 40 percent to total GDP, but they receive only less than 1 percent of total bank credit. On the positive side, there are signs of maturity lengthening over time, with the share of medium- and long-term credit increased from 16.89 percent on average in 2004 to 38.26 percent in 2013.

Figure 2.
Figure 2.

Niger: Bank Credit Allocation and Maturity Structure

Citation: IMF Staff Country Reports 2015, 064; 10.5089/9781498323789.002.A010

Source: Authorities’ data.

4. Bank financing is limited in size and also highly segmented. Formal financial services are typically limited to small segments of the population. Enterprise Survey6 data provide evidence that small firms (5-19 employees) face greater financing obstacles relative to medium and large enterprises. Only 17.6 percent of the firms which belong to this segment have a bank loan or a credit line against 67.2 percent of the medium firms (20-99 employees) and 56.9 percent of the large firms (100+ employees). Banking financing is also highly segmented on the basis of ownership and gender factors. Most firms with 10 percent or more foreign ownership have a bank loan or a credit line (65.8 percent), differently from domestic firms (20.7 percent). The firms where the top management is female are the most disadvantaged with only 9.7 percent of them having access to a bank loan or a credit line. Firms outside of the main urban centers are not covered by Survey data but should be expected to be even more credit constrained.

5. Sector-wide prudential indicators have shown significant improvement between 2010 and 2012 but signs of deterioration are noticeable in recent months (Table 1). In addition, there are several pockets of risk from large exposures. The average capital adequacy ratios have improved steadily in the period 2010-2012 and at the end of 2012 they largely exceeded the regulatory threshold of 8 percent.7 Gross non-performing loans remain above WAEMU average (17.36 percent of total loans against a WAEMU average of 16.98) but provisioning is adequate. The profitability of the banking sector, measured in terms of both return on equity and return on assets, is also high and would permit additional provisioning if needed. There is however heterogeneity among banks. At December 2012 three banks were below the minimum requirement. In addition, some deterioration in capital adequacy and asset quality has emerged in 2013. Credit concentration on the five largest borrowers is very high at 143 percent of regulatory capital at end-June 2013 and represents a major source of risk. Another source of risk stems from the fact that Niger’s banking system has a large share of foreign ownership. Foreign shareholding at year-end 2012 constituted 54 percent of the banking sector’s total capital. The foreign presence is dominated by regional-based groups representing western and northern Africa.

Table 1.

Niger: Financial Soundness Indicators

(Percentage unless otherwise indicated)

article image
Source: BCEAO.

Items reported with biannual periodicity.

Taxes on financial operations excluded.

6. Development of non-banking financial institutions and services is limited. The microfinance sector is one of the least developed in the region, with a volume of outstanding loans corresponding to 0.6 percent of GDP in 2010 against an average of 1.4 percent in the WAEMU. In addition, due to the poor management practices and weak profitability, the sector has undergone a consolidation process.8 For instance the level of penetration of the insurance sector, measured as premiums in relation to GDP, is very low at about 0.6 percent in 2010. Operations in the regional securities market and the regional bond market are limited.9


This note was prepared by Daniela Marchettini.


According to the classification criterion of the BCEAO, 4 banks are middle size (with total assets between 100 and 200 billion CFAF) and 6 small (with total assets inferior to 100 billion CFAF).


A comprehensive analysis of financial market depth and breadth within the WAEMU area can be found in the IMF Country Report No. 13/92 – Supplement – Financial Depth and Macro-Stability.


Data from the survey carried out by Gallup over the 2011 calendar year (WB Findex database). An alternative measure of penetration (access) is the bank accounts to total population ratio that, for the year 2011, is equal to 1.7 percent (BCEAO).


The credit granted to the 5 biggest borrowers corresponds to 12.3 percent of the total at the end of 2012.


In Niger’s IFC/WB Enterprise Surveys, the universe under consideration consists of manufacturing firms surveyed in the cities of Niamey and Maradi.


While this evolution reflects some private capital injections, the contribution of the government has been dominant, with private (national and foreign) capital and government participation increasing 23 and 419 percent respectively between 2010 and 2012 (source: BCEAO).


Between 2009 and 2012 the number of deposit-taking micro-financial institutions has reduced to 49 from 106. (Source: IMF Financial Access Survey).


Niger sovereign issued a 7-year bond for 16.6 billion CFAF in 2009 and a 5-year bond for 25 billion CFAF in 2013.