1.2. Scope of the Study
Financial development is a broad term; it is a combination of
the developments of financial institutions financial markets and financial
assets []. The focus of this study is mainly on the development of financial
institutions. Other aspects such as stock market will not be considered as the
country has no effective and operational stock market. In fact, the whole of
the West African Economic and Monetary Union (WAEMU)2, has only one
stock market located in Abidjan, Ivory Coast. Be it as it may, this regional
stock exchange3 is not well developed to compete with and to break
the monopoly of the banks.
1.3 Brief overview of economic growth and financial
sector Development in Niger
1.3.1 Economic Growth
Since independence (in 1960), Niger has experienced several
profound economic growth. This span of economic developments may be divided
into five (5) different periods.
1963-78 The rural sector contribute more than
half of total value added to GDP, with mining accounting for about 7 percent.
Within this period, there were series of
2 an eight member organization comprising of former French
colonies, Niger, Mali, Benin, Burkina Faso, Cote D'Ivoire, Togo, Senegal and
Guinea Bissau.
3 Common Stock market shared by the former French
Colonies
droughts that weakened the agricultural sector which account
for about 40 percent of the GDP, negatively impacting on growth. Per capita
real GDP growth averaged about 0.8 percent per year; Ministry of Finance of
Niger (2006).
1979#177;82: Higher uranium prices pushed per
capita real GDP growth to an average of about 2.5 percent per year, in this
period. The mining sector contributed an overall GDP of about 13 percent. This
increased government revenue and facilitated greater public investment in
infrastructure; Ministry of Finance of Niger (2006).
1983#177;93: International uranium prices and
Niger's terms of trade declined sharply, significantly reducing export
earnings, slowing investment, and weakening the financial sector. Limited
policy adjustments to the terms of trade and political instability worsened the
situation. Per capita real GDP declined, by an average of 3.4 percent a year;
Ministry of Finance of Niger (2006).
1994#177;98: Along with devaluation of the
CFA franc (in 1994), the Nigerien authorities initiated reforms that worked
towards liberalizing the economy. These measures improved external
competitiveness and strengthened the economy's overall supply response. Good
weather conditions boosted the performance of the agricultural sector, although
per capita real GDP growth still averaged just about 0.5 percent a year; IMF
(2007).
1999-2010: The 1999 elections ushered in a
democratic government and brought consensus on the need for prudent policies
and reforms to strengthen growth and reduce poverty. Consequently state-owned
companies were privatized and domestic and external trade liberalized. While
these reforms strengthened the economy's supply response, droughts continued
to hit the economy leading to limited progress in agricultural productivity
resulting in modest per capita real GDP growth; IMF (2007).
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