VZCZCXYZ0001
RR RUEHWEB

DE RUEHNM #0022/01 0200718
ZNR UUUUU ZZH
R 200718Z JAN 09
FM AMEMBASSY NIAMEY
TO RUEHC/SECSTATE WASHDC 4802
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHC/USTR WASHINGTON DC
RUCPCIM/CIMS NTDB WASHDC

UNCLAS NIAMEY 000022 
 
DEPT FOR EB/IFD/OIA, AF/W, AND AF/EPS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ELAB ETRD KTDB OPIC USTR NG
SUBJECT: 2009 INVESTMENT CLIMATE STATEMENT:  NIGER 
 
¶1. Openness to Foreign Investment 
 
The Government of Niger (GON) welcomes foreign private investment 
and considers it to be critical to economic growth.  Under the 
Investment Code (revised in 2000) industrial investments enjoy tax 
and customs exemptions and even, in some cases, exemptions from the 
value added tax (VAT).  Other tax benefits are possible, but terms 
must be negotiated with the GON on a case-by-case basis.  All 
investors benefit from periods of special tax treatment and tariff 
protection, which vary with the level and location of investment. 
The Investment Code contains no provisions for screening, and 
guarantees equal treatment to foreign investors regardless of 
nationality. 
 
Total foreign ownership is permitted in all sectors except those few 
restricted for national security purposes, such as arms and 
munitions, and private security forces, which require special 
arrangements.  Foreign ownership of land is permitted, but requires 
authorization from the Ministry of Territorial Management and 
Community Development. 
 
According to the World Bank, starting a new business in Niger takes 
28 days and requires 11 different procedures. Niger ranks near the 
bottom rankings in terms of ease of doing business, and the current 
regulatory environment is a significant barrier to private sector 
growth.  In mid-2006, the GON created the National Council of 
Private Investors (CNIP), which was charged with reviewing Niger's 
investment climate and performance and proposing specific actions to 
address the GON investment priorities.  The list of proposed reforms 
included many factors that are widely recognized as critical for 
entrepreneurial development: 
 
-- the number of procedures required for starting a business; 
 
-- the length of time required for starting a business; 
 
-- the administrative costs of starting a business; 
 
-- the number of import tariff rates; 
 
-- the total corporate tax rate as a percentage of gross profits; 
and 
 
-- the number of other corporate taxes. 
 
Unfortunately, the CNIP has not met since its formation, and local 
entrepreneurs have expressed frustration at the government's delay 
in addressing constraints to the growth of existing companies.  The 
GON has undertaken to improve business conditions as part of the 
Millennium Challenge Threshold Agreement, and progress on the 
stalled reform agenda will be required before Niger can progress to 
full MCC Compact status. 
 
The Investment Code offers advantages to sectors that the government 
deems key to the country's economic development:  energy production, 
mineral exploration and mining, agriculture, food processing, 
forestry, fishing, low-cost housing construction, handicrafts, 
hotels, schools, health centers, and transportation. 
 
Barriers to investment include the limited domestic market, high 
transportation costs, and a cumbersome and slow government 
bureaucracy.  Given Niger's low literacy rate, a trained labor force 
and service providers are not widely available. 
 
¶2. Conversion and Transfer Policies 
 
Niger maintains a foreign exchange system that is free of 
restrictions on payments and transfers.  Investment capital and 
returns to capital can be transferred to and from Niger via local 
banks and international financial intermediaries.  Niger is a member 
of the CFA (Communaute Financiere Africaine) zone ("franc zone") and 
the West African Economic and Monetary Union (WAEMU).  Euros and 
dollars are convertible for any amount of CFA at local banks.  In 
order to transfer or convert more than CFA 2 million (approximately 
USD 5,000) to dollars or euros, an authorization for foreign 
exchange is required from the Ministry of the Economy and Finance. 
The international investor community has not complained of 
difficulty in the transfer of funds. 
 
¶3. Expropriation and Compensation 
 
The Investment Code guarantees that no business will be subject to 
acts of nationalization or expropriation, except when deemed "in the 
public interest" as prescribed by the law.  The Code requires that 
the government compensate any expropriated business with just and 
equitable payment.  No expropriations have taken place in recent 
years and given the government policy of promoting private industry, 
none are expected. 
 
¶4. Dispute Settlement 
 
While Niger has a court system to, inter alia, protect property and 
commercial rights, the administration of justice can be slow.  The 
Investment Code also provides for the settlement of disputes and 
indemnification either by arbitration or recourse to the 
international center for settlement of disputes on investment, which 
was created in 1965 by the World Bank. 
 
Niger is a member of OHADA, the Organization for the Harmonization 
of Business Law in Africa (Organisation pour l'Harmonisation Afrique 
des Droits des Affaires).  The OHADA Treaty aims to harmonize 
business laws in 16 African States by adopting common rules adapted 
to their economies, setting up appropriate judicial procedures, and 
encouraging arbitration for the settlement of contractual disputes. 
The Treaty includes regulations concerning business and commercial 
law, such as the definition and classification of legal persons 
engaged in trade, proceedings with respect to credit and recovery of 
debts, means of enforcement, bankruptcy, receiverships, and 
arbitration. 
 
¶5. Performance Requirements and Incentives 
 
Performance requirements are not imposed as a condition for 
establishing, maintaining, or expanding foreign direct investments. 
Incentives do, however, increase as the size of the investment and 
number of jobs created increase. 
 
The Investment Code offers generous, VAT-inclusive tax exemptions, 
depending on the size of the business. Potential tax exemptions 
include:  start-up costs; property, industrial, and commercial 
profits; services and materials required for production; and energy 
use. Exemption periods range from 10-15 years and also include 
waivers of duties and license fees. 
 
¶6. Right to Private Ownership and Establishment 
 
By law and in practice, foreign and domestic private entities have 
the right to establish and own business enterprises and engage in 
all forms of remunerative activity.  Private entities can freely 
establish, acquire, and dispose of interests in business 
enterprises.  Legally established private sector companies have the 
same access to markets, credit, and other business operations as do 
public enterprises (parastatals).  As noted above, foreign ownership 
of land is permitted, but requires authorization from the Ministry 
of Territorial Management and Community Development. 
 
¶7. Protection of Property Rights 
 
Niger is a member of the West African Intellectual Property 
Organization (OAPI), which establishes the legal framework for 
protecting intellectual property and approves requests for 
registration.  Protection is initially granted for 10 years and is 
renewable for up to another 10 years. 
 
As a signatory to the 1983 Paris Convention for the Protection of 
Industrial Property, Niger provides national treatment under 
Nigerien patent and trademark laws to foreign businesses.  Niger is 
also a member of the World Intellectual Property Organization (WIPO) 
and a signatory to the Universal Copyright Convention.  In practice, 
however, the government lacks the capacity and resources to enforce 
copyright violations, and counterfeit CDs and videocassettes are 
readily available in most cities.  Trade secrets can be adequately 
protected within individual business agreements in Niger. 
 
Despite limited resources, the Niger Copyright Office and Niger 
Customs make regular, if infrequent, efforts to enforce copyright 
laws.  In August, 2008, they arrested counterfeiters and seized 
audio cassettes, CDs, DVDs, and a disc burner.  Given the 
profitability of copyright infringement, such episodic enforcement 
efforts are not a significant deterrent. 
 
¶8. Transparency of Regulatory System 
 
The current Investment Code, last revised in 2000, reduced 
bureaucratic obstacles to foreign investment and enlarged the scope 
of industries accorded special incentives to include air 
transportation and the construction and equipping of hotels.  The 
government now promises to approve an investment three months from 
the date of application.  Nevertheless, investors should be prepared 
for delays caused by the process of acquiring inter-ministerial 
approvals. 
 
While efforts continue to make the tax laws more transparent, 
investors find it useful to specify financial obligations, such as 
tax liability, in individual business agreements. 
An updated Petroleum Code, base on international standards, was 
adopted in 2007  In 2006 the government also revised the Mining 
ode to offer specific incentives beyond those listd in the 
investment code:  a five-year income ta holiday for large mines 
(two years for small mies) and exemption from customs duties on 
importe equipment for use in mineral exploration or mining 
operations. 
 
A multi-sectoral regulatory agency began operation in 2004 and has 
oversight over telecommunications and basic utilities (water and 
electricity) pricing. 
 
¶9. Efficient Capital Markets and Portfolio Investment 
 
The GON's policies do not limit the free flow of financial 
resources.  Credit is allocated on market terms, and foreigners do 
not face discrimination in obtaining it. However, generally only 
well-established businesses obtain bank credit, as the cost of 
credit in Niger is high. Nigerien banks offer only a limited array 
of financial instruments:  letters of credit and short to long-term 
loans. 
 
¶10. Political Violence 
 
A previously unknown group, the Mouvement des Nigeriens pour la 
Justice (MNJ), emerged in February 2007.  The predominantly Tuareg 
group has issued a number of demands, mainly related to development 
in Niger's north.  It has attacked military and other facilities and 
laid landmines, particularly in the north.  The resulting insecurity 
has devastated Niger's tourist industry and deterred investment in 
mining and oil.  The GON has labeled the MNJ bandits, criminals, and 
traffickers, and refuses to negotiate with the group until it 
disarms.  Students seasonally demonstrate against the Government in 
protest either against economic changes or their unpaid 
scholarships. 
 
¶11. Corruption 
 
Official corruption occurs, and the Government publicly acknowledges 
that it is a problem and is making efforts to address it.  The 
problem of corruption is compounded by a poorly financed and trained 
law enforcement system and weak administrative controls.  Other 
major underlying causes of corruption are rampant poverty, low 
salaries, the politicization of the public service, the influence of 
traditional kinship, ethnic, and family ties on decision-making, a 
culture of impunity, and a lack of civic education.  Continued 
pressure from foreign donors, civil society and NGOs led to some 
progress in the fight against corruption.  Foreigners are instructed 
not to pay bribes to any policemen, border guards, or other 
government officials.  Bureaucratic processes are slower than 
American standards, but this is due more to inefficiency and lack of 
information technology than to corruption. 
 
¶12. Bilateral Investment Agreements 
 
Niger's bilateral investment agreement with the United States dates 
from September 1962.  Foreign investment in Niger, however, is 
predominantly French or has some French participation.  The 
Investment Code makes no distinction between investors' countries of 
origin.  The GON welcomes foreign direct investment, regardless of 
source.  Niger is a member of the Economic Community of West African 
States (ECOWAS), the West African Economic and Monetary Union 
(WAEMU), and the Lome Convention.  There is strong opposition in 
Niger to ratifying the Economic Partnership Agreement currently 
under consideration by a regional committee made up of ECOWAS plus 
Mauritania.  In late 2006, Niger qualified for the Millennium 
Challenge Corporation's (MCC) Threshold Program, and MCC program 
implementation is underway following the March 2008 signing of the 
Threshold Agreement.  Niger's MCC efforts are focused on promoting 
girls' education, fighting corruption, and improving the business 
environment. 
 
¶13. OPIC and Other Investment Insurance Programs 
 
While Niger is eligible for coverage under OPIC programs, OPIC has 
not been involved in any Niger investment to date.  Sectors for 
potential investment guarantees include:  gold and other mineral 
mining and processing, petroleum production, fruit, vegetable and 
meat processing, semi-finished hide production, and small-scale 
manufacturing.   The U.S. Export-Import Bank (Ex-Im) has a number of 
programs in place specifically geared towards helping sub-Saharan 
Africa manufacturers expand their business by financing U.S. exports 
of manufacturing equipment and services.  In 2006, the Ex-Im Bank 
credit committee awarded Niger an insured loan worth approximately 
USD 699,950 over the next five years. 
 
¶14. Labor 
The supply of skilled workers, technicians, and professionals is 
limited. 
 
There are no more than 81,144 salaried (2005), formal sector 
workers, approximately 55 percent of whom are employed in the public 
sector.  Approximately 85 percent of the country's population makes 
a living from agriculture, herding, petty manufacturing, artisanal 
production, or informal trading.  Wages are low. 
 
Labor-management relations are generally good.  The National 
Federation of Labor Unions (USTN) is well organized and occasionally 
presses its salary, benefit, and other demands (mostly for civil 
servants and parastatal workers) with limited strikes.  However, 
high rates of unemployment and the threadbare state of public 
finances limit USTN's leverage.  Labor law and practice conforms to 
International Labor Organization (ILO) principles. 
 
¶15. Foreign-Trade Zones/Free Ports 
 
Niger has been a member of the WTO since 1996 and as such is 
committed to trade liberalization and an opening of its markets to 
foreign investments.  Local products and traditional handicrafts of 
WAEMU origin enter duty free, together with a limited number of 
industrial products from producing enterprises approved by the WAEMU 
Commission.  According to estimates by the IMF, only one third of 
the WAEMU's intra-community trade is completely duty free due to the 
relatively low level of industrialization of members.  Under the 
provisions of the African Growth and Opportunity Act (AGOA), most 
Nigerien non-textile and apparel exports may enter the U.S. duty 
free.  In December 2003, Niger qualified for textile and apparel 
benefits provided under AGOA.  Niger qualified for Category 9 of 
AGOA in 2006, which mostly allows the entry of hand woven fabric 
into the United States duty free. 
 
¶16. Foreign Direct Investment Statistics 
 
The government actively seeks foreign private investment and 
considers it key to restoring economic growth and development.  In 
2007, foreign direct investment substantially increased - especially 
in the mining sector. More than 120 mineral exploration and 
development permits to companies from 12 countries were awarded in 
¶2007.  The pace of new permits slowed in 2008, but the earlier 
permits are under active development. 
 
Official statistics show Niger's second largest trading partner, 
after France, to be Nigeria.  Nigeria, however, is Niger's largest 
trading partner when informal trade is included.  South and East 
Asian countries also provide foodstuffs (e.g., rice from Thailand) 
and inexpensive manufactured goods (e.g., China, India).  Niger also 
has trade relations with Japan, Germany, Saudi Arabia and the Gulf 
States, the Netherlands, the United Kingdom and, in the region with 
Cote d'Ivoire, Ghana, and Benin. 
 
Foreign investments: 
 
Name  Product Millions US$  Country 
----      -------   ------------   ------- 
Sonichar   Coal      11.0 (a)  France 
Somair     Uranium    6.9 (a)  France (AREVA) 
Cominak    Uranium    6.3 (b)  France (AREVA), Japan, Spain 
Braniger   Brewing    3.1 (a)  France 
SONITEL    Telecom    9.3 (b)  China, Libya 
UNILEVER   Soap    0.4 (a)  Cote d'Ivoire, England 
SEEN       Water      2.2 (a)  France 
SOMINA  Uranium     334.7 (a) China 
Telecom  Telecom  68.4 (a) France 
Imouraren  Uranium   1,500.0 (c) France (AREVA) 
 
(a) data are from 2007 
(b) data are from 2005 
(c) data are from 2008 
 
ALLEN