Financial development and economic growth: evidence from Niger
par Oumarou Seydou
Xiamen University - Master of Economics Applied Finance 2012
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.
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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