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A low income country’s analysis

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Nigers Economic Situation

Niger is a country in the West African region. The main economic activities in the country include agriculture and uranium export. Agricultural activities include rearing of cattle and growing of crops such as cowpeas, onions and cotton. The countrys main export product is uranium. Despite these economic activities in the country, it still lies on the low side of the human development index. For instance, the government mainly depends on aid from other countries and institutions such as the World Bank in order to meet its budget (Watkins, 52-56). This paper evaluates the past and present economic situations of Niger.

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The first Nigers economic indicator to consider is gross domestic product (GDP) per capita. Nigers GDP per capita used to grow at a rate of about 10 % in the 1960s (Watkins, 52-56). However, this growth rate has declined over time mainly due to the fluctuation of uranium prices in the international market. The only time that these prices improved was in the 1970s but that was followed by reduction in the following years. This price reduction greatly affected the funds generated for government operations and provision of services in the country. Consequently, Nigers GDP per capita grew by only 2% by the year 2000. With this low value, it means that corporate firms in the country make very low profits, farmers do not make much money and wages for employees remain very low. Further, figures show that Nigers GDP per capita is about 246 US dollars, which is equivalent to 2% of the average value for the world. This is a very low number, which means that many people in this country are not able to afford good standards of living. Moreover, if many people in Niger have low incomes, it means that there is no trickledown effect in the country. Trickledown effect occurs when many people in a country have sufficient income, which enables them to live comfortably. For instance, such individuals can employ house helps and pay them well. However, this is not the case in Niger.

Another factor that is related to Nigers economic position is unemployment rate which is deteriorating with time. Its average value was 2.25 % and this was expected to worsen to 1.88 % by the year 2012 (Trading Economics, para 1-2). In the period between 2001 and 2008, the country experienced a high unemployment rate of 15.9% and the lowest rate was 1.47%. These percentages represent the number of people who were actively looking for jobs in relation to the current labor force in the country. An increase in these figures could be a result of two factors: a new group of people starts looking for jobs and a section of the labor force looses their jobs or starts looking for new positions. The former group could be a due to graduation of college and university students. On the other hand, the latter group could be due to retrenchment or people looking for better paying jobs.

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The third indicator of Nigers poor economic situation is inflation rate. This indicator is evaluated in terms of the consumer price index (CPI) (Trading Economics, para 1-2). The products and services considered in determining this index are weighted depending on their importance. For instance, food, energy, housing, and medical care usually get the highest weight due to their importance. Starting from the year 2003 to present, Nigers inflation rate has had an average of 2.6%. However, the most recent figures obtained in the September 2013 were 3.2%, which is almost the predicted future value for the countrys inflation rate of 3.24%. During the last ten years, Nigers inflation rate has reached extremes of 15.4% and -4.2%. With these fluctuating inflation rates, it means that the investors in the country do not have constant profits from their businesses. Similarly, a business firm is not able to predict its future operations because prices keep on changing with varying inflation rates. As a result, the confidence of carrying out business in such a country reduces and hence, investors move to other places. Moreover, whenever this rate is high, it means that Niger citizens always have difficulties purchasing basic commodities.

Since uraniums prices in the international market have reduced, Niger needs to focus on improving the agricultural practices in order to generate more revenue. One of the challenges that face agriculture is reliance on rain. Therefore, whenever rain is not sufficient, food production is reduced to a point of the country requiring aid in form of grains in order for the citizens to get something to eat. Therefore, the government should encourage the use of irrigation among farmers. In addition, the government could also set up irrigation schemes for purposes of ensuring sustained food production irrespective of rains. The second challenge towards agriculture in Niger is that a huge part of the population practices subsistence farming. With this practice, it means that land is highly fragmented, which reduces efficiency of food production. The government could actually remedy this problem by providing incentives towards large-scale farming. Actually, large-scale farming would also enhance irrigation of farms, which would also contribute towards improved food production.

Apart from agriculture, Nigers economy could also benefit by exploiting other mineral deposits of minerals such as phosphates, coal and limestone among others. Therefore, if the country would establish industries for extraction of these minerals, there would be job creation and revenue generation. However, some minerals such as coal might be of poor quality for sale in the international market. This is because these coal deposits have low energy contents but high ash percentages. On the other hand, such coal could be used for energy production within the country.

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