• Niger’s economy grew 10.3% in 2024 and is projected to expand 6.6% in 2025.

• Yet non-performing loans hit 27.4%, far above the WAEMU average, exposing banks to heavy losses.

• High debt costs, weak bank capital, and lingering effects of sanctions weigh on financial stability.

Niger is recording some of the fastest growth in Africa, yet its banking sector is weighed down by weak loan portfolios.

According to data from the Central Bank of West African States (BCEAO), the gross deterioration rate of bank loans reached 27.4% in Niger, more than three times the West African Economic and Monetary Union (WAEMU) average. The net rate, after provisions, remains alarming at 15.2%. With a coverage ratio of 52.6%, far below international standards often above 80%, Nigerien banks remain exposed to heavy potential losses.

This reflects a mix of factors. The country is emerging from regional and international sanctions that cut off access to financial markets after the July 2023 coup. Although restrictions were lifted in early 2024, confidence has not fully returned.

The IMF notes that bank deposits fell 3.4% in 2024 while non-performing loans climbed to 26.8% by December. In February 2025, one bank still failed to meet the 11.5% solvency ratio, requiring about CFA116 billion ($206 million), equal to 0.9% of GDP, to restore capital and meet prudential standards.

Tensions are also visible on the regional debt market. In May 2025, Niger’s bonds were issued at an average rate of 8.6%, 315 basis points higher than Côte d’Ivoire’s, despite shorter maturities. The average maturity of new debt has collapsed from 60 months to 18 months in two years, raising refinancing risks. In April 2025, the BCEAO ended exceptional measures that had allowed Niger’s bonds to avoid default classification, a change that could weigh further on bank balance sheets holding these securities.

Among the most exposed banks is Sonibank, which holds 21.5% of system assets. More than half of its portfolio is directed to small and medium-sized enterprises. As a key lender to large firms and local businesses, Sonibank has been hit by public sector arrears and post-sanctions liquidity shortages. It has already received support from the West African Development Bank (BOAD) to recapitalize and strengthen liquidity.

Despite these strains, Niger’s economy remains strong. After expanding 10.3% in 2024, driven by oil exports and a solid farming season, GDP is expected to rise 6.6% in 2025. Inflation, which had peaked at 9.1%, is projected at 4.2%, within the WAEMU convergence target.

The Niger-Benin pipeline boosted oil revenues in 2025, raising government income in the first quarter. A reform of the oil stabilization fund, adopted in June 2025, is designed to ensure more transparent and countercyclical use of these revenues. Still, challenges weigh on trade and limit medium-term growth, which the IMF expects at about 6.3% for 2026–2030.

The paradox remains: strong economic growth alongside a banking system weakened by public arrears, a fragile business base, and ongoing security shocks. To offset this, the government is pushing financial inclusion through the National Fund for Support to Small and Medium Enterprises and Industries (FONAP) and the Financial Inclusion Development Fund (FDIF), each now with five branches, including one for Islamic finance. Meanwhile, microfinance reforms continue: TAANADI lost its license, ASUSU is under restructuring, and the Union of Mutual Credit Unions remains under temporary administration.

The IMF stresses the urgent need for Niger to strengthen oil sector governance, clean up public finances, and recapitalize fragile banks. Without swift action to improve provisioning and risk management, the country’s economic gains could quickly turn into a major financial vulnerability.