Niger Integrated State-Owned Enterprise Framework iSOEF December 2019 Integrated State-Owned Enterprise Framework (iSOEF) Corporate Governance and Accountability and Fiscal Risk Assessment Republic of Niger December 2019 © 2019 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this work is subject to copyright. As The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Attribution—Please cite the work as follows: “World Bank. 2019, Integrated State-Owned Enterprise Framework, Republic of Niger. © World Bank.” All queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Contents Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Main Abbreviations and Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii Chapter 1: Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Chapter 2: The SOE Landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Recent Developments in the SOE Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Areas of SOE Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 SOE Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Chapter 3: iSOEF Module 2: Assessment of Fiscal Risks from SOEs in Niger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 The Importance of Monitoring and Managing Fiscal Risks . . . . . . . . . . . . 11 Recent Macro-Fiscal Developments in Niger . . . . . . . . . . . . . . . . . . . . . . . . . 13 Fiscal Risks from SOEs May Be High and Increasing . . . . . . . . . . . . . . . . . 15 A Forward-Looking Approach to Assessing Fiscal Risks from SOEs in Niger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Chapter 4: iSOEF Module 4: Corporate Governance and Accountability Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Legal and Regulatory Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Ownership and Oversight Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Boards of Directors and Executive Management . . . . . . . . . . . . . . . . . . . . . . 46 Transparency and Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Procurement by SOEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Chapter 5: Action Plan for an Improved SOE Sector . . . . . . . . . . . . . . . 55 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 iii Annex 1: Legal Framework for SOEs and Parastatals in Niger . . . . . . 59 Annex 2: Fiscal Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Annex 3: A Simple Framework for the Analysis of Fiscal Risks . . . . . 67 Annex 4: Risk Assessment and Impact of Shocks on SOEs and Fiscal Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Annex 5: Evolution of the SOE Sector in Niger . . . . . . . . . . . . . . . . . . . . . 75 Annex 6: Data on SOEs and Public Agencies in Niger . . . . . . . . . . . . . . 85 Annex 7: Legal and Regulatory Framework for Procurement . . . . . . 111 Annex 8: Overview of SOEs in Niger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Annex 9: Overview of OHADA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 Annex 10: Action Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Tables Table 1: SOEs by Legal Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Table 2: Selected Service Delivery Indicators for Niger . . . . . . . . . . . . . . . . 9 Table 3: Preliminary Fiscal Exposure for the Central Government from SOEs in Niger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Table 4: Debt Stock of Five SOEs, 2011–17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Table 5: Subsidies and Transfers Received by Five SOEs . . . . . . . . . . . . . . . 18 Table 6: Net Contribution to the Budget of Five SOEs (CFAF millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Table 7: Central Government On-lending to SOEs, 2017 . . . . . . . . . . . . . . . 20 Table 8: Macroeconomic Assumptions under Baseline Scenario, 2017–35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Table 9: Central Government Financial Operations under Baseline Scenario, 2017–35 (% of GDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Table 10: Proxy Fiscal Risk Indicators for Five SOEs in Aggregate under Baseline Scenario (% of GDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Table 11: Debt Stock for Five SOEs under Baseline Scenario, 2018–35 . . 28 Table 12: Elasticity of Spending and Revenues among Five SOEs . . . . . . . 29 Table 13: Legal Framework for SOEs and Parastatals in Niger . . . . . . . . . . 60 Table 14: Fiscal Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Table 15: Risk Assessment and Impact of Shocks on SOEs and Fiscal Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Table 16: List of SOEs and Public Agencies in Niger . . . . . . . . . . . . . . . . . . . 85 Table 17: Key SOEs (CFAF millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 iv Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger Table 18: Subsidies, by SOE, CFAF millions . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Table 19: Subsidies by Ministry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Table 20: Number of Employees per SOE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Table 21: Sample of SOE Financial Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 Table 22: SOE Action Plan and Sequencing of Implementation . . . . . . . . 127 Figures Figure 1: The iSOEF Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Figure 2: SOE Sectors by Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Figure 3: Parastatal Subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Figure 4: Operating Balance of Five SOEs (% of GDP) . . . . . . . . . . . . . . . . . 30 Figure 5: Net Contribution to the Budget of Five SOEs (% of GDP) . . . . . 31 Figure 6: Total Dividends Paid by Five SOEs (% of GDP) . . . . . . . . . . . . . . 32 Figure 7: Total Taxes Paid by Five SOEs (% of GDP) . . . . . . . . . . . . . . . . . . . 32 Figure 8: Gross Debt of SOEs (% of GDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 9: Net Debt of SOEs (% of GDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Figure 10: Fiscal Balance (% of GDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Figure 11: Central Government Debt (% of GDP) . . . . . . . . . . . . . . . . . . . . . . 35 Figure 12: Consolidated Central Government Debt and Debt of Five SOEs (% of GDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Figure 13: Channels through Which SOEs Could Become a Source of Fiscal Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Figure 14: Consolidated Central Government Debt and Debt of Five SOEs (% of GDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Figure 15: Channels through Which SOEs Become the Source of Fiscal Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Contents v Acknowledgments The Niger Integrated State-Owned Enterprises Framework (iSOEF) was undertaken by the Governance Unit Francophone West Africa (EA2G1) of the Equitable, Finance, and Institutions (EFI) Vice Presidency of the World Bank. The team was led by Ragnvald Michel Maellberg (Task Team Leader- TTL, Senior Public Sector Specialist), Immanuel Steinhilper (Co-TTL, Senior Public Sector Specialist), and Markus Kitzmuller (Co-TTL, Senior Economist). The project team included Mathieu Cloutier (Young Profes- sional), Josue Akre (Financial Management Specialist), Marcel Nshimiyimana (Country Economist), Fabienne Mroczka (Senior Financial ­ Management Specialist), Marc-Anton Pruefer (Junior Professional Officer) and Sadia Afolabi (Public Sector Specialist). Salimata Bessin Dera (Team Assistant), Hadidia Djimba (Team Assistant), and Patrice Sade (Program Assistant) provided support during the preparation of the report. The team benefitted from the guidance and the quality control of the EFI SOE Group coordinated by Alexandre Arrobbio (Practice Manager) and comprising Martha Martinez Licetti (Practice Manager), Eva M. Gutierrez (Lead Financial Sector Specialist), Sunita Kikeri (Lead Financial Sector Spe- cialist), Ruth Hill (Lead Economist), Natalia Manuilova (Senior Financial Management Specialist), Georgiana Pop (Senior Economist), Sudarshan Gooptu (Lead Economist), and Henri Fortin (Lead Financial Management Specialist). The team also benefitted from the strategic directions and valuable advice provided by Soukeyna Kane (Country Director), Edward Olowo-Okere (Governance Global Director), Joelle Dehasse (Country Manager), Lars Christian Moller (Practice Manager), Michael Hamaide (Country Program Coordinator), and José López Cálix (Program Leader), as well as the com- ments from the peer reviewers: Kjetil Hansen (Senior Public Sector vii Specialist), Natalia Manuilova (Senior Financial Management Specialist), and Fiseha Haile (Senior Economist). The World Bank acknowledges the close and fruitful collaboration of the Government of Niger (GoN) in the preparation of this report. The World Bank would like to extend its sincere gratitude to the Minister of Finance of Niger, the Honorable Mamadou Diop. This report would not have been possible without the support and contri- butions of the GoN and its administration. In particular, the World Bank would like to thank: Kane Aïchatou Boulama (Minister of Planning), Abdou Rafa Maman Laouali (Director General of the DGOF/R), Fatchima Rabo (Deputy Secretary General of the Ministry of Finance), Moussa Moha (Director of Studies and Planning of the Ministry of Finance), Barazé ­ Salamatou Katambé (Director of the DEP/PE), Hassan Djafarou (Head of Service at the DEP/PE), Habou Hamidine (Secretary General of the Minis- try of Finance), Mohamed Abdoulaye (Deputy Director of Budget), Idi Dan Kari (Director of Debt), Djibo Moussa Yacouba (Tax Inspector), Nouhou Tari (Certified Accountant and President of the National Institute of Char- tered Accountants, ONECCA), and Zakariaou Seibou Daouda (Vice Presi- dent of the Tribunal of Commerce in Niamey), as well as Claire Hanounou (Coordinator of the Public Sector Capacity Building for Service Delivery Project), Mahaman Sani Kanta (Deputy Coordinator of the Public Sector Capacity Building for Service Delivery Project), and their staff. viii Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger Main Abbreviations and Acronyms AGM Annual General Meeting ARM Multisector Regulation Authority (Autorité de régulation multisectorielle) ARMP Public Procurement Regulatory Authority (Autorité de Réglementation des Marchés Publics) BRVM Regional Stock Exchange (Bourse Régionale des Valeurs Mobilières) CAFER Autonomous Road Maintenance and Financing Fund (Caisse Autonome de Financement et de l’Entretien Routier) CAIMA Agricultural Material and Inputs Procurement Body (Centrale d’Approvisionnement en Intrants et Matériels Agricoles) CdC Court of Accounts (Cour des Comptes) CFAF Financial Community of Africa Franc (Franc de la Communauté Francophone Africaine) CNPC-NP China National Petroleum Corporation-Niger Petroleum CNUT Niger Advisory Body of Users of Public Transport (Conseil Nigérien des Utilisateurs de Transports Publics) COPRO-NIGER National Corporation for Commerce and Production of Niger (Société Nationale de Commerce et de Production du Niger) DEP/PE Directorate of State-Owned Enterprises and the Portfolio of the State (Direction des Entreprises Publiques et du Portefeuille de l’État) DG Director General DGB General Directorate of Budget (Direction Générale du budget) DGE/EP General Directorate of State-Owned Enterprises DGOF/R General Directorate of Financial Operations and Reforms (Direction Générale des opérations financières et des réformes) ix DGTCP General Directorate of the Treasury and Public Accounting (Direction Générale du trésor et de la comptabilité publique) DSA Debt Sustainability Analysis EPA Administrative Public Entity EPF Public Financing Agency (Entité publique de financement) EPIC Industrial and Commercial Public Entity EPP Professional Public Agency (Entité publique professionnelle) EPS Social Public Agency (Entité publique sociale) EPSCT Scientific, Cultural and Technical Public Agency (Entité publique scientifique, culturelle et technique) EUR Euro GA General Assembly GDP Gross Domestic Product GoN Government of Niger IFRS International Financial Reporting Standards IMF International Monetary Fund IMSA Imouraren SA iSOEF Integrated State-Owned Enterprise Framework LONANI National Lottery (Loterie Nationale du Niger) MAPS Methodology for Assessment of National Procurement Systems MEP Ministry of Public Enterprises MoF Ministry of Finance NIGELEC Niger Electricité Corporation (Société Nigérienne d’Électricité) NITRA Niger Transit Corporation (Société Nigérienne de Transit) OECD Organisation for Economic Co-operation and Development OFEDES Office of underground water (Office des Eaux du Sous-sol) OHADA Organisation for the Harmonization of Corporate Law in Africa (Organisation pour l’harmonisation en Afrique du droit des affaires) ONAHA Niger Office of hydro-agriculture work (Office Nigérien des Aménagements Hydro-Agricole) ONECCA National Institute of Chartered Accountants (Ordre Nationale d’Experts Comptables et des Comptables Agréés) ONPPC Niger Office of National Pharmaceutical and Chemical Products (Office National des Produits Pharmaceutiques et Chimiques du Niger) OPT Niger Post (Office de la Poste du Niger) OPVN Niger Food Products Office (Office des Produits Vivriers du Niger) PEFA Public Expenditure and Financial Assessment SE State-Owned Corporation x Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger SEEN Water Management Company (Société d’Exploitation des Eaux du Niger) SEM Mixed Economy Corporation SNC Nigerian Society of Cement Plants (Société Nigérienne de Cimenterie) SOE State-Owned Enterprise SONARA Nigerian Society of Peanuts (Société Nigérienne de l’Arachide (no longer active)) SONICHAR Niger Coal Corporation (Société Nigérienne de Charbon) SONIDEP Niger Petroleum Product Corporation (Société Nigérienne des Produits Pétroliers) SONIPHAR Niger Pharmaceutical Industry Corporation (Société nigérienne des industries pharmaceutiques) SONITEL Niger Telecommunications Corporation (Société Nigérienne de Télécommunications) SONUCI Niger Urban and Construction Corporation (Société Nigérienne d’Urbanisme et de Construction Immobilière) SOPAMIN Niger Mining Company (Société du Patrimoine des Mines du Niger) SORAZ Refinery Corporation of Zinder (Société de Raffinage de Zinder) SPE Public Water Utility (Services Publics d’Eaux) SPEN Niger Water Corporation (Société du Patrimoine des Eaux du Niger) SYSCOHADA OHADA Accounting System (Système Comptable d’OHADA) TTL Task Team Leader US$ United States Dollar WAEMU West African Economic and Monetary Union WB World Bank Main Abbreviations and Acronyms  xi Executive Summary State-owned enterprises (SOEs) are and have become increasingly dominant in Niger. The number of SOEs has increased by 109 since 1985. Of the 164 SOEs in operation in the country in 2018, 5 are state-owned corpora- tions (SEs), 31 are mixed-economy corporations (SEMs), and 17 are indus- trial and commercial public entities (EPICs), i.e., 53 SOEs operated on a commercial basis (SE, SEM, EPIC). 103 are noncommercial parastatals (EPA, EPCST, EPP, EPF and EPS), which are governed by a different legal framework. Finally, there are 8 other SOEs that are governed by specific legal frameworks. SOEs play a central role in Niger’s economy. SOEs are important eco- nomic actors, particularly in the oil and gas and mining sectors, and provide essential public services, such as electricity, water, and telecommunications. The top 3 SOE sectors by assets out of a subset of major SOEs for which financial data was available are: oil and gas (67 percent), mining (15 percent), and electricity (9 percent). Data collected indicates that total SOE sector rev- enues amount to over 20 percent of GDP, and taxes generated by SOEs amount to about 26 percent of Niger’s budget. Wages paid to SOE employees amount to about 2.1 percent of GDP, as compared to an overall government wage bill of 5.7 percent of GDP. Parastatals also provide essential social services, particularly in edu- cation and health. Financial data on subsidies received by Nigerien para- statals indicates that the top 3 sectors are: education (59 percent) health (20  percent), and infrastructure (10 percent). The available data further indicates that total subsidies amounted to about 1 percent of GDP, or 7 per- cent of public expenditures. Since 2010, the reform efforts of the Government of Niger (GoN) have focused on improving the oversight and performance of SOEs. The Directorate of State-Owned Enterprises and the Portfolio of the State xiii (Direction des Entreprises Publiques et du Portefeuille de l’État, or DEP/PE) was established in 2014 under the Ministry of Finance (MoF). The GoN has continued its efforts to improve SOEs’ functioning in strategic sectors such as electricity, telecommunications, transportation, agriculture, and water, and has begun to better control SOEs through some audits and the gradual establishment of financial information monitoring mechanisms. Niger is a country case in which, even with limited and inconsistent information, the World Bank has been able to apply the Integrated State- Owned Enterprises Framework (iSOEF). The study analyzes the SOE landscape, assesses the fiscal impacts of SOEs (iSOEF Module 2), and evalu- ates SOE corporate governance and accountability mechanisms (Module 4). The study is based on data gathered through research and field missions, con- ducted in close collaboration with government authorities. Quantitative infor- mation was collected from sources such as the MoF, the Court of Auditors, and interviews with government representatives, and consolidated by the World Bank study team. The diagnostic of SOE corporate governance and the fiscal risk assessment based on five selected SOEs representing 9.3 percent of Niger’s GDP offer important lessons for the way forward. Fiscal Risks The level of fiscal risk emanating from SOEs is significant. Budget trans- fers to SOEs increased from CFAF 24 billion, or 4.5 percent of budget expen- ditures, in 2010, to CFAF 62 billion, or 6.4 percent of budget expenditures, in 2017. SOEs executed public investment amounting to CFAF 26 billion, or 2.7 percent of public expenditures, in 2017. Several SOEs are required to ful- fill public service obligations—for example, to provide services or goods at prices lower than those of the market. This generates fiscal risks, distorts the markets in which they operate, and crowds out private operators. Fiscal risks are compounded by SOEs’ access to commercial credit and the trend of SOEs having recourse to short-term debt. SOEs benefit from debt guaran- teed by the state, including concessional debt. Niger lacks a comprehensive framework for identifying, assessing, and disclosing fiscal risks. Despite its importance and its potentially sig- nificant impact on public finances and macroeconomic stability, fiscal risk from SOEs is not monitored. Key elements, including subsidies, public ser- vice obligations, guarantees, arrears, debt, staffing, and the performance of the public sector workforce are not properly monitored, thereby compound- ing the fiscal risk from SOEs given their potentially significant impact on public accounts and macroeconomic stability. xiv Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger SOE debt and tax arrears are high, and fiscal risks are increasing. The accumulated debt of SOEs in Niger is estimated at about 25 percent of GDP, half of the overall public debt. SOEs have accumulated tax arrears esti- mated at 1.0 percent of GDP in 2017. Budget transfers to SOEs amounted to 1.8 percent of GDP in 2017, and SOE-executed public investment accounted for 5.7 percent of public investment in 2017. Fiscal sustainability analysis reveals that SOEs could increase the central government’s fiscal deficit by 0.5 percent of GDP and debt by 11.6 percent of GDP under stress test scenarios. These potential effects constitute a lower bound, and adjustment would be challenging given the tight fiscal conditions currently in place. The estimated impact constitutes a conservative estimate. More severe macroeconomic shocks, such as a com- prehensive global or regional economic crisis, would have much larger, mul- tidimensional effects that would be significantly more difficult to address. Despite the existence of a formal procedure for the approval of guar- antees, they are not recorded explicitly and resulting contingent liabili- ties are unknown. Applications for guarantees must pass through the prime minister’s office, which relies on the recommendation of the interdepartmen- tal committee responsible for monitoring debt and budget support, headed by the MoF’s General Directorate of Financial Operations and Reform. Upon issuing a guarantee, no document is retained (such as a table of existing guar- antees) and no control of the guarantees already in place is carried out. It seems, therefore, that the interdepartmental committee makes decisions on new guarantees without knowing the current stock of existing guarantees or the risk that could be posed if current guarantees were called on. Debts between the government and SOEs and among SOEs are not settled, which has contributed to the accumulation of arrears. This reflects a lack of clearly defined responsibilities on the part of all actors and results in a vicious cycle of nonpayment. The GoN, for example, is delaying payments to SOEs for electricity, telecommunications, and other public ser- vices. Similarly, SOEs are delaying the payment of taxes and social contribu- tions owed to the government. In addition, cross-debts can accumulate among SOEs that are in a producer–provider relationship, such as the National Office of Pharmaceutical and Chemical Products (ONPPC) and the Niger Pharmaceutical Industry Corporation (SONIPHAR), which often do not settle their bills. This indirect assistance hides the total magnitude of financial support to SOEs and makes it difficult to evaluate the overall impact. Compensation and clearance efforts have not recently been undertaken. Inefficient information systems, capacity constraints, and a lack of data and analysis are major constraints that hold back the assessment Executive Summary xv of fiscal risks from SOEs. Available financial information on the sector is partial and outdated, and there is no consolidated financial information except on budget transfers. Accordingly, there is no consolidated analysis of trends and risks associated with SOEs. Even the data that are available are not used to analyze the financial performance of SOEs. There is significant scope for the GoN to reduce its exposure to fiscal risk from SOEs. This could be achieved by reducing state participation in commercial activities, limiting exposure to contingent liabilities, strength- ening governance arrangements, legislating no-bailout clauses to reduce exposure, ensuring transparent and appropriate compensation for SOEs that execute quasi-fiscal activities, ensuring that there is fiscal space to absorb retained risks, and including SOEs in the definition of deficit targets. Corporate Governance Ordinances adopted in 1986 foresee four types of SOEs and parastatals but do not offer a complete picture of their governance regime. While provisions are similar for all types of SOEs and allow for general and direct oversight, these ordinances do not present SOE governance arrangements comprehensively or consistently. This creates unnecessary complexity and fragmentation, which is compounded given that EPICs, SEs, and SEMs are subject to commercial law under the Organization for the Harmonization of Corporate Law in Africa (Organisation pour l’harmonisation en Afrique du droit des affaires, or OHADA). Although legal dispositions exist for the transmission of information, they lack detail and are not followed systematically. Regarding financial reporting and audit, SEs, SEMs, and EPICs are subject to the same legal framework that applies to the private sector. EPAs, on the other hand, are subject to public law and all public accounting rules. Yet these rules are only partially applied, and SOE expenditures are therefore not systematically recorded in the government’s financial statements. Transparency require- ments relating to SOEs, especially EPICs and EPAs, could be strengthened and the level of internal control in EPICs, SEs, and SEMs could be improved. Oversight responsibility is fragmented, and SOEs are subject to a de facto dual oversight model. The MoF is responsible for financial oversight, while sectoral ministries are responsible for technical oversight. In practice, sectoral ministries do not generally have the capability to conduct effective oversight through regular monitoring and efficient evaluation, and staff do not have specialized skills in monitoring performance. The state’s financial xvi Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger oversight and shareholder roles are further weakened by the institutional positioning of the MoF’s SOE monitoring unit. Financial oversight is undermined by limited interaction between the oversight entity and the agencies under its control. The DEP/PE is experiencing difficulties in exercising authority over the entities it oversees. It appears that many parastatal organizations do not systematically transmit financial statements and estimates to the DEP/PE on a regular and timely basis. Overall, the DEP/PE has little interaction with parastatal organiza- tions. This situation has improved to some degree following a series of com- munication initiatives and reminders undertaken by the MoF in 2017. Legal texts do not require any minimum specialized experience for directors and, in practice, the general assemblies of SEs duplicate the work of their boards of directors. All SOEs must have a board of directors, and in the case of EPAs and EPICs, it is the highest decision-making body. SEs and SEMs are required to have a general assembly (GA) of shareholders, which is the company’s highest decision-making authority. The chief execu- tive is nominated by decree of the President of the Republic for SOEs of which the government owns a majority of shares and by the board for enti- ties with minority state ownership. There is limited access to information or publication of information relating to SOEs in Niger, and SOEs are not required to form audit com- mittees. An annual audit by an external auditor is required for the financial statements of EPICs, SEs, and SEMs, but the work of the auditors is not used effectively. Moreover, the sanctions provided for in the law are not applied. Although all SOEs are subject to periodic compliance audits by the Court of Accounts (Cour des Comptes) (CdC), the court lacks the resources needed to perform regular audits. This means it can only conduct audit controls of a selected number of SOEs each year. In the past few years, the CdC has pub- lished detailed annual reports on the results of controls it has conducted. Action Plan Based on the findings of the iSOEF, a three-year, sequenced, and selec- tive action plan for Niger’s SOE reform has been developed and adopted by the MoF. This action plan focuses on: (i) strengthening the institutional framework for financial oversight; (ii) improving financial information and monitoring of fiscal risk; (iii) increasing transparency and improving audits; and (iv) legal reforms. This tailored action plan seeks to improve financial oversight, and management of fiscal risk (Annex 10). Executive Summary xvii First, the DEP/PE could be elevated to the rank of a General Direc- torate. Transforming the DEP/PE into a new General Directorate of SOEs (DGE/EP) could help mitigate the current limits to and fragmentation of financial oversight. Second, it is critical to enhance the collection of data, as well as the regular and timely publication of annual financial statements. Improv- ing the management and monitoring of SOE performance and associated fis- cal risks requires good quality data. To that end, it is critical to ensure regular and timely publication of annual financial statements, the establishment of a monitoring dashboard for SOE financial information, and the creation of a system for collecting and transmitting financial reports and statements. A third set of priority actions include producing an annual aggre- gated report on SOEs and strengthening the management and moni- toring of fiscal risks. Preparing an annual aggregated report on SOEs will provide critical information to improve oversight of the sector—first for gov- ernment use, and later for publication. A methodology for analyzing and fol- lowing up on fiscal risks needs to be developed and adopted, and current performance contracts need to be catalogued and assessed. Finally, enhancing the performance of the SOE sector and limiting fiscal risk requires an updated legal framework. The updated ­framework would need to formalize the current mechanism for financial oversight (the dual model) and grant an important role to the MoF in creating SOEs and conducting SOE financial oversight to ensure better fiscal management and monitoring. Additionally, a revised legal framework would help to expand the corporatization of SOEs and define clear criteria for their establishment. xviii Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger CHAPTER 1 Introduction This Integrated State-Owned Enterprises Framework (iSOEF) assess- ment has been carried out in the context of the World Bank’s ongoing dialogue with the Government of Niger (GoN) on state-owned enter- prises (SOEs). The GoN, through its Ministry of Finance (MoF), has sought the World Bank’s support in responding to the challenges posed by SOE gov- ernance and fiscal risks. The GoN is considering progressive reform to con- trol SOE-related budget expenditures, improve financial and operational performance, and better manage emanating fiscal risks. The Niger iSOEF focuses on the fiscal implications of SOE reform and on corporate governance and accountability mechanisms. The iSOEF, developed by the World Bank, covers four modules that capture key aspects of SOEs, one sector-specific module, and three cross-cutting the- matic modules relating to the context within which SOE reform is assessed and implemented (Figure 1). The four main modules focus on: (i) the effects of SOEs on markets (Module 1); (ii) the fiscal impacts of SOE reform (Mod- ule 2); (iii) the distributional impacts of SOE reform (Module 3); and (iv) cor- porate governance and accountability mechanisms (Module 4). The iSOEF includes a sector-specific module (Module 5) on state-owned financial insti- tutions (SOFIs) and additional sectors (e.g., the electricity sector, extractive industries, and the water and sanitation sector) are expected to be covered in 1 FIGURE 1:  The iSOEF Framework SOE landscape Corporate governance SOE effects Fiscal impacts Distributional and on markets impacts accountability mechanisms Political Communication economy Sector- State-owned financial institutions specific or Other sectors (to come) special themes Anticorruption and integrity Context the future. Finally, three thematic modules address cross-cutting factors such as corruption risks, political economy considerations, and communica- tion strategies. To be considered an iSOEF assessment, a study must include at least two modules. This iSOEF assessment on Niger analyzes the SOE landscape, assesses the fiscal impacts of SOEs (Module 2), and evaluates cor- porate governance and accountability mechanisms (Module 4). This study focuses on three types of commercial SOEs governed by a common legal framework: state-owned corporations (SEs); mixed-­ economy corporations (SEMs), which are partly state owned, with mixed state and private sector holdings; and industrial and commercial public enti- ties (EPICs), which engage in commercial activities and provide public ser- vices. The study briefly presents some aspects related to administrative public agencies (EPAs). The scope of the study includes neither an analysis of individual enterprises or entities nor an analysis of privatization possibilities. Niger is a country case in which, even with limited and inconsistent information, the World Bank has been able to apply the iSOEF. The study is based on data gathered through research and field missions, con- ducted in close collaboration with government authorities. Quantitative 2 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger information was collected from sources such as the MoF, the Court of Audi- tors, and interviews with government representatives, and consolidated by the World Bank study team. The diagnostic of SOE corporate governance and the fiscal risk assessment based on five selected SOEs for which suffi- cient data was available and which represent 9.3 percent of Niger’s gross domestic product (GDP) offer important lessons for the way forward. Based on the fiscal risk assessment and diagnosis of governance rules and practices, this study incorporates an action plan of policies and options for reforms that are deemed feasible within Niger’s con- text. The action plan proposes gradual measures that are sequenced and pri- oritized. To the extent possible, it tailors these measures to capacity and contextual factors that are specific to Niger, rather than directly transposing international good practices. The report is organized as follows. Chapter 2, the SOE Landscape, pro- vides an overview of the SOE sector in Niger, covering the size, scope, and performance of SOEs. Chapter 3, based on Module 2 of the iSOEF, provides a fiscal risk assessment of the SOE sector, including a fiscal sustainability analysis covering different scenarios. Chapter 4, based on Module 4 of the iSOEF, reviews the corporate governance and accountability mechanisms pertaining to SOEs in Niger, including the legal and regulatory framework and the state’s oversight role and capacity to exercise its ownership and con- trol functions effectively. Chapter 5 proposes reform options, adapted to the country context, that target improved SOE governance in the short and medium term. Introduction 3 CHAPTER 2 The SOE Landscape Recent Developments in the SOE Sector Since 2010, the GoN’s reform efforts have focused on improving the oversight and performance of SOEs. The Directorate of State-Owned Enterprises and the Portfolio of the State (Direction des Entreprises Publiques et du Portefeuille de l’État, or DEP/PE) was established in 2014 under the MoF. The CdC, Niger’s supreme audit institution, was created in 20121 and has a chamber dedicated to the control of SOEs’ accounts. The GoN has con- tinued its efforts to improve SOEs’ functioning in strategic sectors such as oil and gas, mining, electricity, telecommunications, agriculture, and water. Although many reforms have been undertaken in these areas, they have been relatively targeted and incremental and used a variety of instruments such as tariff adjustments (electricity), fiscal adjustments (telecommunications), performance contracts (agriculture), and restructuring and recapitalization (telecommunications). Authorities have also begun to better control SOEs through some audits and the gradual establishment of financial information monitoring mechanisms (Annex 5). 1. Organic Law No. 2012-08 determining the powers, composition, organization, and operation of the CdC. 5 Niger has over 160 SOEs and parastatals. In 2018, there were a total of 164 SOEs in the country, of which 53 were EPICs, SEs, and SEMs operating on a commercial basis (Table 1).2 The number of SOEs has increased by 109 since 1985, which corresponds to the creation of 36 SOEs per decade, on average. In 2013, 14 SOEs were created, whereas only one SOE was created during the 2014–17 period, and 16 between 2017 and 2018. The activities of some SEs, SEMs, and EPICs are presented in Annex 6. TABLE 1: SOEs by Legal Status Type of SOE Number Description State-owned   5 SOEs that are fully owned by the corporations (SE) state and undertake commercial or industrial activities using methods applied by the private sector Mixed-economy  31 SOEs with mixed state and private corporations (SEM) sector holdings that undertake commercial or industrial activities using methods applied by the private sector Commercial public  17 SOEs organized as public agencies agencies (EPIC) with commercial and social objectives Administrative public 103 Parastatals that do not perform agencies (EPA) commercial and industrial activities Parastatals and that fulfil a mission of public interest Other   8 Other parastatals, including professional public entities; social public entities; scientific, cultural, and technical public entities; and financing public entities Source: DEP/PE and authors’ calculations. Areas of SOE and Parastatal Activity SOEs play a central role in Niger’s economy. SOEs are important eco- nomic actors, particularly in the oil and gas and mining sectors, and provide essential public services, such as electricity, water, and telecommunications (Figure 2). The top 3 SOE sectors by assets out of a subset of major SOEs for 2. For comparison, there are 150 SOEs in Mauritania, of which 50 operate on a commercial basis. There are 51 SOEs in Madagascar, 21 in Chad, and 45 in Mali. 6 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger FIGURE 2:  SOE Sectors by Assets Oil & gas Mining Electricity Telecom Other Source: DEP/PE and authors’ calculations. which financial data was available are: oil and gas (67 percent), mining (15  percent), and electricity (9 percent).3 Data collected further indicates that total SOE sector revenues amount to over 20 percent of GDP, and taxes generated by SOEs amount to about 26 percent of the country’s budget. Wages paid to SOE employees amount to about 2.1 percent of GDP, as com- pared to an overall government wage bill of 5.7 percent of GDP. Parastatals (EPAs and others) also provide essential social services, particularly in education and health.4 Financial data on subsidies received by Nigerien parastatals indicates that the top 3 sectors are: education (59 per- cent), health (20 percent), and infrastructure (10 percent) (Figure 3). The available data further indicates that total subsidies amounted to about 1 per- cent of GDP, or 7 percent of public expenditures. 3. This calculation is based on financial information for the years 2014–2017 for 13 major SOEs for which data was available. It excludes State-Owned Financial Institutions (SOFIs) and several mining companies. 4. This is based on information on subsidies for 2017 paid to 91 out of 111 parastatals or 82% of the total universe. The SOE Landscape 7 FIGURE 3:  Parastatal Subsidies EP sector subsidies Education Health Infrastructure Administration Other Source: DEP/PE and authors’ calculations. SOE Performance Given the size and importance of Niger’s SOE sector, the lack of avail- ability of consolidated financial information could present a serious challenge. Although all SOEs are required to produce financial statements, these are frequently subject to significant delays, and audited versions are not systematically transmitted to the DEP/PE. The quality and reliability of the reports need to be improved, especially because there are no standard formats—for example, for management reports. Where standards do exist, as in the case of accounting under the Organization for the Harmonization of Corporate Law in Africa (Organisation pour l'harmonisation en Afrique du droit des affaires, or OHADA) or the accounting of the state, they are only partially applied. There are also challenges regarding the classification of expenditures, which makes it difficult to analyze and monitor transfers to SOEs. Transfers to the National Assembly are classified as transfers to an EPA, for example, which distorts the available information on SOE transfers. The creation of the DEP/PE within the MoF’s General Directorate of Finan- cial Operations and Reforms represents a first step in establishing an entity that can consolidate information on SOEs. This information consolidation is not  yet fully effective, and no consolidated analyses of SOE trends are undertaken. 8 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger Financial Performance SOEs’ financial performance could benefit significantly from further improvements, but given the gaps in available data, it is difficult to con- duct comprehensive quantitative data analysis. Indications are that cer- tain ratios of debt to assets are negative, with significant variations from year to year, between different sectors, and between different types of SOEs (Annex 6). These ratios are not consistent, which points to a lack of reliable data. Gaining access to more—and more accurate—data would allow for more in-depth analysis and a better diagnosis of SOE challenges related to financial performance. To this end, conducting a census of all SOEs and their relevant data would be of high priority in ensuring the existence of reliable data to support evidence-based decision making. Such a census would be a prerequi- site for the establishment of a database and monitoring tool for the financial oversight of sector fiscal risks, a central recommendation of this report. Service Delivery Performance While SOEs receive substantial grants, the scope and quality of ser- vices they provide are limited. Table 2 provides indicative statistics on the TABLE 2: Selected Service Delivery Indicators for Niger Average among Low-Income Sub-Saharan African Niger Countries Access to electricity (% of the population), 2016 16.2 42.8 Consumption of electric energy (kWh per 51.4 480.6 capita), 2015 Access to improved water supply (% of the 39 58 population), 2015 Death by communicable diseases and maternal, 63 56 prenatal, and nutrition conditions (% of total), 2016 Rate of measles immunization (% of children 78 70 aged 12–23 months), 2017 Consumption of fertilizer (kilograms per hectare 0.4 16.2 of arable land), 2016 Mobile cellular subscriptions (per 100 persons), 41 72 2017 Source: World Development Indicators database, World Bank, May 2019; WHO and UNICEF (2017). The SOE Landscape 9 goods or services that are provided mainly or entirely by SOEs in Niger. These include health services, which are often provided by public hospitals and clinics, and water and electricity, which are provided by SOEs. Data show that the level of service provision in Niger could be improved. These performance deficits affect the business environment, and while SOE per- formance has improved significantly in recent years, Niger’s investment cli- mate remains challenging. 10 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger CHAPTER 3 iSOEF Module 2: Assessment of Fiscal Risks from SOEs in Niger The Importance of Monitoring and Managing Fiscal Risks Governments are exposed to a variety of risks to their fiscal sustain- ability, and the linkages between SOEs and government balance sheets are an important source of this type of risk. Such risks are particularly pronounced and endogenous in countries that define their fiscal targets in terms of the public sector, including SOEs. Although this is not the case in Niger, important channels between central government finances and SOE performance make the country’s fiscal sustainability vulnerable to adverse spillovers. For profitable SOEs, for example, the main fiscal risks affecting government revenues emanate from variability in dividends and taxes paid to the central government budget. Loss-making SOEs, on the other hand, could exert significant pressure on public expenditures if they require a bail- out, periodic recapitalization, or regular support in the form of subsidies or transfers. Empirical evidence from around the world points to sizable fiscal costs accrued through government obligations vis-à-vis SOEs. An 11 International Monetary Fund (IMF) study (Bova et al. 2016) finds that, between 1990 and 2014, 14 percent of all identified contingent liabilities in a sample of 80 advanced and emerging market economies were related to gov- ernments’ SOE portfolios. For example, fiscal costs from SOE bailouts aver- aged 3 percent of GDP and reached 15 percent of GDP in one case. Contingent liabilities through SOEs represented the fourth-largest source of total fiscal cost, on average, in the sample. Niger lacks a comprehensive framework to identify, assess, and dis- close fiscal risks. Although fiscal risks can potentially have a significant impact on public finances and macroeconomic stability, these are not moni- tored. The central government budget does not include any systematic risk analysis related to the SOE portfolio. In addition, the Organic Law of Finance does not specify which SOE financial information must be included in the annual budget. Yet macroeconomic and other shocks are frequently identi- fied in Niger’s budget execution reports as reasons for deviations from initial budgets, which demonstrates that there is scope for improvement in risk assessment, management, and mitigation. SOE debt and tax arrears are high in Niger, and fiscal risks are increasing. The accumulated debt of SOEs is estimated at about 25 percent of GDP, or half of the country’s overall public debt. SOEs may have accumu- lated tax arrears estimated at 1.0 percent of GDP in 2017. Budget transfers to SOEs increased from 4.5 percent of the total budget in 2011 to 6.4 percent of the total budget, or 1.8 percent of GDP, in 2017. SOE-executed public invest- ment amounted to 2.7 percent of total expenditures and 5.7 percent of public investment in 2017. SOEs also benefit from important tax exemptions (although no estimate is available) and several are obliged to fulfill quasi- fiscal activities, often providing services or goods at below-market or below- cost prices. Such links between SOEs and government balance sheets generate fiscal risks and distort market competition with private firms. Fiscal sustainability analysis reveals that SOEs could increase the central government’s fiscal deficit by 0.5 percent of GDP and debt by 11.6 percent of GDP under stress test scenarios. The aggregate impact of, for example, a 23.5 percent reduction in oil prices, a 27.5 percent reduction in uranium prices, and a 4 percent drop in GDP growth in 2020 would reduce the central government’s overall fiscal balance by around 0.4 or 0.5 percent- age points of GDP between 2020 and 2035, compared to the baseline. If the central government were to consolidate SOE and central government debt from 2020 on, then the overall debt would increase by 11.6 percent of GDP, on average—that is, by 10.1 percent of GDP between 2020 and 2023 and by 12.1 percent of GDP between 2024 and 2035. 12 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger These potential fiscal effects constitute a lower bound, and adjust- ment would be challenging given the tight fiscal conditions currently in place in Niger. Moreover, it is likely that the estimated impact as quantified in this analysis constitutes a conservative estimate. First, the results of this analysis represent only the impact of a subset of five of Niger’s 164 SOEs and—although the SOEs were selected based on their size and perceived fis- cal risk—other SOEs may also present substantial additional fiscal exposure. Second, less likely—though more severe—macroeconomic shocks, such as a comprehensive global or regional economic crisis, would be much larger, more multidimensional, and much more difficult to deal with. Finally, the stress tests do not account for sector- or SOE-specific sources of risk (related, for example, to capital investment programs, regulatory price setting, and natural disasters). There is significant scope for the GoN to reduce its exposure to fiscal risk from SOEs. This could be accomplished by reducing overall state par- ticipation in commercial activities, limiting exposure to contingent liabili- ties, strengthening governance arrangements, legislating explicit no-bailout clauses to reduce exposure, ensuring transparent and appropriate compen- sation for SOEs that execute quasi-fiscal activities, and, finally, ensuring that there is fiscal space to absorb retained risks and including SOEs in the defini- tion of deficit targets. Recent Macro-Fiscal Developments in Niger While the macro-fiscal situation has improved, Niger remains highly exposed to external shocks. Real annual growth rates averaged 6.4 percent between 2012 and 2017, compared to 5.1 percent between 2001 and 2007 and 1.6 percent in the previous decade. Growth is highly volatile, driven predom- inately by agriculture, and therefore subject to climatic shocks. The extrac- tives sector is subject to commodity price fluctuations. Continuing security challenges stifle economic activity and strain the fiscal situation through increased security spending and costs related to humanitarian crises. Breaking a deteriorating trend since 2014, a strong fiscal consolida- tion program spurred improvements in the fiscal deficit beginning in 2016. The fiscal deficit was 1.7 percent of GDP between 2011 and 2013 and deteriorated to 8.5 percent of GDP between 2014 and 2015. In 2017, the over- all deficit (on a commitment basis, including grants) narrowed to 5.7 percent of GDP from 6.1 percent in 2016 and 9.0 percent in 2015 (Annex 2). The GoN has strengthened commitment control monitoring and budget payment iSOEF Module 2: Assessment of Fiscal Risks from SOEs in Niger 13 systems to guide its fiscal consolidation effort. It created an interministerial committee to improve expenditure management and established a mecha- nism that prioritizes expenditures based on the alignment of quarterly com- mitment plans with the Treasury cash plan, which has ensured that expenditures remain within the limits of resource availability. Niger’s tax revenue was hard hit by the decline of oil and uranium prices. Following the launch of oil production in 2012, tax revenue increased from 13.4 percent of GDP in 2011 to 16.0 percent of GDP in 2015. Tax revenue subsequently dropped to 13.5 percent and 13.1 percent of GDP in 2016 and 2017, respectively, due to a decline in uranium and oil prices which, together with the recession in neighboring Nigeria, reduced government revenues. These trends were reflected in the taxes paid by the five major SOEs reviewed by this study, which increased from 0.18 percent of GDP in 2011 to 0.27 per- cent of GDP in 2015 then dropped to 0.15 percent of GDP in 2016 before recovering to 0.19 percent of GDP in 2017. Public expenditure increased significantly when oil production began but has since begun to decline. Public spending increased by 13 per- centage points between 2011 and 2015, from 19.4 of GDP to 32.4 percent of GDP. Most of this increase was financed by resource revenues.5 By contrast, public spending declined from 32.4 percent of GDP in 2015 to 26.9 percent of GDP in 2017 as oil and uranium revenues fell. Both capital and recurrent expenditures have borne necessary adjustments. Capital spending declined from 16.9 percent of GDP in 2015 to 12.7 percent of GDP in 2017, while recurrent expenditures declined from 15.4  percent to 13.7 percent of GDP during the same period. Measures to eliminate redundancies in public service employment and enforce stricter controls on the wage bill have helped to control recurrent spending. As in the past, the budget deficit has been financed by external concessional loans, domestic grants, and, to a lesser extent, regional financing. Transfers and subsidies have accounted for more than one-third of recurrent expenditures. Subsidies to the five SOEs examined by this study peaked at 0.55 percent of GDP in 2014 before settling to 0.36 percent of GDP in 2017. Niger’s public and publicly guaranteed debt stock has risen in recent years. This debt reached an estimated 49.3 percent of GDP in 2017, up from 25.9 percent in 2011 and 24.7 percent of GDP in 2013. Consolidated central government and SOE debt is high at an estimated 74.3 percent of GDP in 2017. Outstanding on-lent loans to SOEs and guaranteed debt to China National Petroleum Corporation–Niger Petroleum amounted to 6.08 5. With the start of petroleum production, extractive sector revenue grew from 2 percent of GDP in 2010 to 7 percent of GDP in 2016. 14 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger percent of GDP and 0.6 percent of GDP in 2017, respectively. External debt accounts for 70 percent of public and publicly guaranteed debt, the bulk of which (54 percent) is concessional debt to multilateral creditors. Such rapid growth reflects the scaling up of government borrowing to fund public investment in infrastructure and extractive industries. Fiscal Risks from SOEs May Be High and Increasing This study reviews the potential fiscal risks emanating from a sample of five SOEs representing a potential source of fiscal risk among SOEs in Niger and proposes concrete actions to manage them. It presents a fiscal risk matrix and estimates the impact of oil and uranium shocks on taxes and dividends, on SOE financial performance, and, ultimately, on the central government’s fiscal balance and debt stock in a simple macro-fiscal framework. It focuses on quantifying the impact of those shocks on debt owed by these five SOEs—that is, on implicit contingent liabilities to the cen- tral government budget. It also proposes concrete actions to manage fiscal risks more effectively based on other countries’ experience (see Annex 3 for a presentation of the fiscal risk analysis framework). Criteria for the selection of the five sample SOEs included size (mea- sured by assets, liabilities, and net assets), losses (net income), net debt (total liabilities minus current assets), and net transfers from the gov- ernment. Moreover, the five selected SOEs have benefitted from an admin- istrative and financial audit financed by the World Bank’s Public Sector Capacity and Performance for Service Delivery Project (known in Niger as the projet de capacités et de performance du secteur public pour la prestation de services), which allowed access to more accurate data. The selected SOEs (Annex 8) are the Agricultural Material and Inputs Procurement Body (Cen- trale d’Approvisionnement en Intrants et Matériels Agricoles, or CAIMA); the Niger Petroleum Product Corporation (Société Nigérienne des Produits Pétroliers, or SONIDEP); the Niger Mining Company (Société du Patrimoine des Mines du Niger, or SOPAMIN); the Niger Water Corporation (Société du Patrimoine des Eaux du Niger, or SPEN); and the Niger Food Products Office (Office des Produits Vivriers du Niger, or OPVN). Although individual perfor- mance varies, the five entities together account for 9.3 percent of GDP in 2015. Of the five, three (OPVN, SOPAMIN, and CAIMA) recorded losses in 2016. All five are significantly indebted, at a total of 8 percent of GDP in 2017, and most of them have been producing chronic losses that have eroded their iSOEF Module 2: Assessment of Fiscal Risks from SOEs in Niger 15 capital bases. The accumulated loss in 2017 is estimated at around 1.0 per- cent of GDP. Evaluating fiscal risk requires quantifying the links between SOEs and the budget, within the framework of a fiscal risk matrix (Table 3). SOEs’ direct contribution to the budget (through dividends and taxes paid) and their direct and indirect obligations—such as subsidies, tax arrears, and guaranteed and non-guaranteed liabilities—as of the end of 2017 have been estimated for both the full portfolio of SOEs and the sample of five important SOEs. TABLE 3: Preliminary Fiscal Exposure for the Central Government from SOEs in Niger Contingent Liabilities Revenues Direct Liabilities (% of GDP) (% of GDP) Five All Five All Five All SOEs SOEs SOEs SOEs SOEs SOEs Direct Taxes paid  1.4  4.0 revenues (% of total taxes) Dividends paid 10.0 17.8 (% of nontax revenue paid) Explicit Subsidies and 0.36 1.82 Direct 0.0 0.6 obligations transfers guarantee On-lent loans 2.85 6.08 Implicit Tax and social 0.4 1.0 Unguaranteed 6.26 25.0 obligations security arrears debts Source: Ministry of Finance, Debt and DEP/PE departments. Accumulated SOE debt is high. The accumulated debt of all SOEs is estimated to have been about 25 percent of GDP in 2017, or half of Niger’s public debt. One-third of this debt (6.26 percent of GDP) is estimated to be held by the five selected SOEs (Table 4). SPEN and SONIDEP are the main debt holders, at 3.45 percent of GDP and 1.5 percent of GDP, respectively. This high level of debt is a result of insufficient own resources to invest. The amount of debt and associated servicing terms (such as interest rate and maturity) are not monitored. Moreover, the ease of access to commercial credit and the trend of SOEs gaining recourse to short-term debt worsen the fiscal risk. This implies the existence of a budget liability of unknown mag- nitude, since even if the debts are not explicitly guaranteed by the state, it seems unlikely that the government would allow SOEs to go bankrupt. 16 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger TABLE 4: Debt Stock of Five SOEs, 2011–17 2011 2012 2013 2014 2015 2016 2017 SOPAMIN CFAF millions 6,662 7,434 10,733 8,079 14,820 14,766 8,834 % of GDP 0.22 0.21 0.28 0.20 0.35 0.33 0.19 SONIDEP CFAF millions 10,097 26,057 31,396 47,147 32,334 62,254 70,935 % of GDP 0.33 0.74 0.83 1.16 0.75 1.38 1.50 OPVN CFAF millions 6,527 25,126 27,828 37,671 25,048 29,233 35,340 % of GDP 0.22 0.71 0.73 0.93 0.58 0.65 0.75 SPEN CFAF millions 82,663 90,870 96,820 121,205 144,949 153,611 163,058 % of GDP 2.73 2.56 2.56 2.98 3.38 3.41 3.45 CAIMA CFAF millions 12,925 11,246 10,923 11,011 13,215 12,936 17,762 % of GDP 0.43 0.32 0.29 0.27 0.31 0.29 0.38 TOTAL CFAF millions 118,874 160,733 177,700 225,113 230,366 272,799 295,930 % of GDP 3.93 4.54 4.69 5.53 5.37 6.05 6.26 Source: Ministry of Finance, DEP/PE. SOEs may have accumulated large tax arrears, and debts between SOEs and the government are not being settled. The General Tax Direc- torate’s Department of Large Corporations monitors SOE tax arrears, with little to no participation from the DEP/PE. According to 2017 data from the Department of Large Corporations, by delaying the payment of taxes and social contributions owed to the government, SOEs have accumulated tax arrears representing 8.6 percent of tax revenue or 1.0 percent of GDP, of which 0.4 percent of GDP is for the five SOEs highlighted in this study alone. In addition, the GoN is delaying its payments to SOEs (for example, for elec- tricity, telecommunications, and other public services). The claims on the central government and on other SOEs’ customers are high, with a potential negative impact on the country’s cash situation. These SOEs do not have an adequate mechanism for recovery of claims, which is at the origin of the cash flow problems that often force them to resort to expensive bank loans. This situation puts these SOEs in a difficult position, in which they must choose between not repaying or defaulting on their debt repayment and triggering a potential bailout or recapitalization from the central government. This might complicate the evaluation of the net debt of SOEs and make it difficult to evaluate their overall impact. Some compensation and clearance efforts have been undertaken in the past. Meanwhile, a detailed inventory has not been conducted recently. iSOEF Module 2: Assessment of Fiscal Risks from SOEs in Niger 17 Dividends and taxes paid by SOEs are volatile. Taxes and dividends paid by the five SOEs in question amount to CFAF 9,134 million (1.5 percent of tax revenues), or 0.2 percent of GDP against an estimated 1.0 percent of GDP paid by all SOEs. SONIDEP and SOPAMIN are the main contributors to the central government budget. Since 2011, taxes and dividends have fluc- tuated between a minimum of 1.0 percent of tax revenue in 2012 and a maxi- mum of 2.0 percent in 2015, declining to 1.2 percent in 2016 and 1.5 percent in 2017. As SONIDEP and SOPAMIN revenues depend on the sale of oil and uranium, the volatility of taxes and dividends reflects the fluctuation of oil and uranium prices observed during the same period. This may be a source of fiscal risk, as the central government cannot accurately predict the budget resources to be generated by these SOEs due to exogenous price factors. A substantial increase in subsidies and other budget transfers to SOEs is observed, both in absolute terms and relative to the national budget. Subsidies to the five SOEs peaked at CFAF 22.5 billion, or 0.55 percent of GDP, in 2014, then declined to CFAF 17.0 billion, or 0.36 percent of GDP, in 2017. CAIMA and OPVN are the main beneficiaries of subsidies and transfers from the central government (Table 5). Although subsidies received by these two SOEs continue to be significant, they have declined considerably since peak- ing in 2012 for CAIMA and in 2014 for OPVN. This decline has put OPVN and CAIMA in a difficult position, as subsidies constitute their main source of income. To overcome this situation, both SOEs have had to borrow from the banking system. In addition, because these SOEs make public policy TABLE 5: Subsidies and Transfers Received by Five SOEs 2011 2012 2013 2014 2015 2016 2017 SOPAMIN CFAF millions — — — — — — — % of GDP — — — — — — — SONIDEP CFAF millions 128 119 111 102 94 85 76 % of GDP — — — — — — — OPVN CFAF millions 487 416 1,373 13,053 11,292 8,473 11,552 % of GDP 0.02 0.01 0.04 0.32 0.26 0.19 0.24 SPEN CFAF millions — 55 49 43 11 — — % of GDP — — — — — — — CAIMA CFAF millions 5,567 13,554 9,054 9,304 6,368 5,306 5,341 % of GDP 0.18 0.38 0.24 0.23 0.15 0.12 0.11 TOTAL CFAF millions 6,182 14,145 10,587 22,502 17,765 13,864 16,970 % of GDP 0.20 0.40 0.28 0.55 0.41 0.31 0.36 Source: Ministry of Finance, DEP/PE. 18 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger investments for which they are not reimbursed and sell at a price below the purchase price to honor their public service commitments, this might gener- ate fiscal risks and distort the markets in which they operate. The net contribution of the five SOEs to the budget is negative. Taxes and dividends paid by the five SOEs peaked at 0.33 percent of GDP in 2015 and declined to 0.19 percent of GDP in 2017. SONIDEP and SOPAMIN are the main contributors. As the two SOEs operate in the extractives sector (oil and uranium, respectively), their financial health has been adversely affected by the fall in international prices for these commodities, and their payment of taxes and dividends to the central government has, in turn, been hard hit. Given the high level of state transfers to CAIMA and OPVN, the net contri- bution of the five SOEs to the budget (measured by taxes and dividends minus subsidies and transfers) was negative, at an estimated –0.17 percent of GDP (Table 6) as compared to –0.5 percent of GDP for all SOEs combined. Although there is a formal procedure for the approval of guarantees, they are not recorded explicitly, and resulting contingent liabilities are unknown. Applications for guarantees must pass through the prime minis- ter’s office, which relies on the recommendation of the interdepartmental committee responsible for monitoring debt and budget support, headed by TABLE 6: Net Contribution to the Budget of Five SOEs (CFAF millions, unless indicated) 2011 2012 2013 2014 2015 2016 2017 SOPAMIN Taxes 1,646 844 1,449 2,005 4,340 673 1,589 Dividends 0 0 0 0 0 0 0 SONIDEP Taxes 3,809 3,770 7,803 7,144 6,540 5,385 5,416 Dividends 0 0 0 0 2,500 644 347 OPVN Taxes 12 323 59 68 191 81 1,467 Dividends 0 0 0 0 0 0 0 SPEN Taxes 55 115 141 164 220 243 143 Dividends 0 0 0 0 0 0 0 CAIMA Taxes 13 39 126 558 173 226 173 Dividends 0 0 0 0 0 0 0 TOTAL (CFAF) 5,535 5,090 9,578 9,938 13,964 7,251 9,134 (% of GDP) 0.18 0.14 0.25 0.24 0.33 0.16 0.19 Transfers (% of GDP) 0.20 0.40 0.28 0.55 0.41 0.31 0.36 Net (% of GDP) –0.02 –0.26 –0.03 –0.31 –0.08 –0.15 –0.17 contribution Source: Ministry of Finance, DEP/PE. iSOEF Module 2: Assessment of Fiscal Risks from SOEs in Niger 19 the MoF’s General Directorate of Financial Operations and Reform. Upon issuing a guarantee, no document is retained (such as a table of existing guar- antees) and no government entity carries out a control of the guarantees already in place. It seems, therefore, that the interdepartmental committee makes decisions on new guarantees without knowing the current stock of existing guarantees or the risk that could be posed if current guarantees were called on. Currently, the only recognized guarantee in Niger is that extended to China National Petroleum Corporation during the construction of the Zinder Oil Refinery (SORAZ) in 2008, equivalent to US$352 million (CFAF 194.7 billion, or 3.7 percent of GDP). The outstanding stock of CFAF 28.3 billion (0.6 percent of GDP) as of end-June 2018 is scheduled to be fully repaid by 2019. On-lent loans are high and, unlike guarantees, subject to automatic transparent accounting. Original on-lent loans to SOEs consist mainly of loans contracted by the central government and on-lent to the electricity (NIGELEC), water (SPEN), and telecommunications (Niger Telecom) com- panies. These are equivalent to CFAF 293,785 million, or 6.22 percent of GDP. The SOEs have paid back only 0.13 percent of GDP so far, and at the end of 2017, the outstanding amount was CFAF 287,512 million, or 6.08 percent of GDP (Table 7). While the guaranteed loan will only be recognized in the budget when it is called on, on-lent loans come from resources that have been granted directly to the government. As a result, the on-lent loans imme- diately affect the central government’s gross debt (unlike guaranteed debt) and fall within the national budget, allowing parliament to exercise supervi- sory power. TABLE 7: Central Government On-lending to SOEs, 2017 Original On-lent Payment Made Outstanding On-lent Outstanding On-lent Amounts (CFAF) (CFAF) Amount (CFAF) Amount (% of GDP) SPEN 140,367 5,766 134,601 2.85 NIGELEC 98,532 183 98,349 2.08 SONITEL 54,886 324 54,562 1.15 TOTAL 293,785 6,273 287,512 6.08 Source: Ministry of Finance, debt department. Cross-debts can accumulate among SOEs that are in a producer–­ provider relationship. For example, the National Office of Pharmaceutical and Chemical Products (Office National des Produits Pharmaceutiques et Chi- miques du Niger, or ONPPC) and the Niger Pharmaceutical Industry Corpo- ration (Société nigérienne des industries pharmaceutiques, or SONIPHAR) 20 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger often do not settle their bills. Such assistance hides the total magnitude of financial support to SOEs and makes it difficult to evaluate the overall impact. Compensation and clearance efforts have not been undertaken recently. Many SOEs encounter substantial difficulties in recovering client debts. One entity interviewed for this study mentioned that, for a certain segment of its products, 90 percent of clients’ credit lines were in payment arrears for more than a year. In this case, the SOE stated that these arrears are fully provisioned and sometimes written off. The rules on the constitu- tion of provisions used by SOEs are not transparent, and most of them do not include this information in their financial statements. Inefficient information systems, capacity constraints, and a lack of data and analysis are major constraints that hold back the assessment of SOE-related fiscal risks in Niger. First, available financial information on the sector is partial and out of date, and there is no consolidated financial information except on budget transfers. Accordingly, there is no consolidated analysis of trends and risks associated with SOEs. Second, even the data that are available are not used to analyze the financial performance of SOEs. The DEP/PE performs no meaningful analysis of the budget performance or financial support of either the broader public sector or the entities included in the state’s portfolio. Specifically, the DEP/PE does not collect or update the information in a systematic way, nor does it produce further financial infor- mation for the portfolio or analysis of existing risks and their potential evolu- tion according to different scenarios. Accordingly, the DEP/PE cannot reasonably quantify the profits and losses of individual SOEs or of the portfo- lio as a whole. Third, capacity constraints and fragmented oversight arrange- ments prevent the DEP/PE from effectively monitoring financial risks. Given these shortcomings and the fragmented state of the oversight function, the DEP/PE does not have the technical and institutional capacities to monitor and analyze the fiscal risks associated with SOEs. It is not able to monitor risks and performance issues emanating from: (i) the creation of new entities; (ii) loss-making entities in the state’s portfolio; (iii) the accumulation of debt and contingent liabilities due to implicit or explicit state guarantees; or (iv) uncontrolled recruitment and the state’s related financial obligations. Financial oversight is undermined by limited interaction between the oversight entity and the agencies under its control. The DEP/PE is experiencing difficulties in exercising authority over the entities it oversees. It appears that many parastatal organizations do not systematically transmit financial statements and estimates to the DEP/PE on a regular and timely basis. Information from the Court of Auditors and financial reports are often delayed in reaching the DEP/PE, and in some cases are not transmitted at all. Overall, the DEP/PE has little interaction with parastatal organizations. iSOEF Module 2: Assessment of Fiscal Risks from SOEs in Niger 21 This situation has improved to some degree following a series of communi- cation initiatives and reminders undertaken by the MoF in 2017. Key elements of SOEs’ interactions with the central government bud- get and the economy as a whole—including subsidies, public service obli- gations, guarantees, arrears, debt,6 staffing, and performance of the public sector workforce—are not properly monitored and may compound the fiscal risk emanating from SOEs. SOE-related fiscal risks and their potential impact on public accounts and macroeconomic stability are signifi- cant, but these risks are not monitored. They are discussed in more detail below. Subsidies Following reforms implemented by the MoF in 2013, the DEP/PE moni- tors subsidies to some extent and, since 2018, has participated actively in budget preparation discussions regarding SOE subsidies. Subsidies to SOEs are often desirable. For example, subsidies can be designed to support capital investments, such as the construction and rehabilitation of necessary infrastructure, that, when combined with strengthened management of those investments, would produce positive results and future cash flows. Similarly, grants can be used to repay the SOE for executing public service obligations, such as providing essential services in rural areas. Although the DEP/PE monitors, to some degree, the allocation of subsidies to SOEs, it does little to monitor their use. As such, several SOEs in Niger seem to use subsidies to finance their operating costs, while their investments are often funded by commercial bank loans, thereby rendering their operations unsustainable. Moreover, the level of subsidies is not always aligned to the specific public service operations that SOEs are expected to deliver. While the DEP/PE has recently begun to participate actively in discussions on SOE subsidies, it con- tinues to have little influence in determining the level of subsidies. Public Service Obligations The DEP/PE does not participate in discussions on the definition of public services, which do not sufficiently consider financial conse- quences for the government. SOEs, particularly EPICs, are sometimes responsible for performing public service obligations and investments for which the costs are not identified with precision and for which they are not reimbursed. CAIMA, for example, is charged with distributing agricultural 6. This refers to debt held in commercial banks. 22 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger inputs such as fertilizers and tractors at prices well below the purchase price, with the public good objective of increasing agricultural yields around the country. This poses important fiscal challenges for the government, however, as CAIMA’s reliance on declining subsidies in the face of insuffi- cient cost coverage has driven the SOE to borrow commercially and accrue significant debt. Dividends There is no general standard for determining dividend amounts or other financial objectives in Niger. The distribution of profits through dividends, or their retention for reinvestment programs or other incentives, is decided by the board of directors of the entity in question. Some countries have developed specific financial performance objectives or minimum divi- dend levels for SOEs. Staff The financial risks related to SOE human resources are not subject to effective monitoring. Decree 86-154/PCMS/Mtoe/SEM of October 23, 1986, concerning the general status of SOE staff—namely of EPICs, SEs, and SEMs—defines a general framework relating to the strength of the SOE. A January 21, 1987,7 decree defines and sets employment conditions for differ- ent groups of staff. Each SOE has a particular status, and the management of human resources does not seem to be homogeneous. Under the current sys- tem, SOE recruitment and responsibilities vis-à-vis the state are not subject to systematic monitoring or control. Moreover, monitoring is hampered by the different statutes that apply to staff and by the absence of a consolidated monitoring system. The lack of controls on wage bill increases in the para- statal sector represents a potential risk to financial performance, which may manifest in the form of payment of arrears, health care expenditures, or pen- sion obligations not budgeted for in advance. Performance Framework The task of monitoring performance in the SOE sector is devolved to the sectoral ministries that have technical oversight over SOEs, and 7. The number of the decree is not provided on the copy received as part of the preparation of this report. iSOEF Module 2: Assessment of Fiscal Risks from SOEs in Niger 23 their monitoring is limited. In practice, Niger’s sectoral ministries do not generally have the capacity to conduct effective oversight through regular monitoring and efficient evaluation. In addition, these oversight entities do not have specialized skills in monitoring performance. Although the legal framework provides for the possibility of creat- ing program (performance) contracts based on defined performance targets, these have not been used for several years, except recently in the agricultural sector. Although the state can negotiate annual or multi- annual program contracts with SOEs,8 this does not generally appear to be done in practice. The exception is in agriculture, where performance con- tracts were signed in 2017 under the framework of European Union budget support to the GoN’s Initiative 3N nutritional program. These performance contracts are valid for two years (2018–19) and include performance indica- tors for each objective of the contract, as well as reporting requirements (for example, the submission of quarterly reports on the execution of the con- tract). The definition of performance targets could help to strengthen accountability, especially in strategically important SOEs. Program contracts could also be used to establish targets for SOE financial performance, although other means exist as well. While these contracts represent a good first step toward the establishment of a culture focused on performance, they include pricing features that limit financial discipline. The price of SOE products or services is fixed by the government—seemingly a political deci- sion. This may prevent operations from being carried out in a way that opti- mizes cost recovery, and there is no corresponding subsidy to cover the difference between the contract price and a price of cost recovery. A Forward-Looking Approach to Assessing Fiscal Risks from SOEs in Niger Baseline Scenario The macroeconomic outlook under the baseline scenario is positive. Real GDP in Niger is predicted to grow at 6.9 percent between 2018 and 2023 and 6.0 percent between 2024 and 2035. The GDP deflator is projected to average 2.2 percent between 2018 and 2023 and 2.0 percent between 2024 and 2035. Hence, the growth rate of nominal GDP is estimated at 9.2 percent between 2018 and 2023 and 8.1 percent between 2024 and 2035. It is assumed that the CFAF will continue to be pegged to the euro through 2035. A 8. Ordinance 86-002. 24 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger TABLE 8: Macroeconomic Assumptions under Baseline Scenario, 2017–35 2017 2018 2019 2020 2021 2022 2023 2024–35 Est. Proj. Proj. Proj. Proj. Proj. Proj. Proj. Nominal GDP (CFAF billions) 4,726 5,135 5,600 6,051 6,518 7,340 7,993 13,736 Nominal GDP growth (% change) 4.8 8.6 9.1 8.1 7.7 12.6 8.9 8.1 Real GDP growth rate (% change) 4.9 5.2 6.5 6.0 5.6 11.0 6.8 6.0 GDP deflator (% change) –0.1 3.3 2.4 1.9 2.0 1.4 2.0 2.0 Oil prices (US$/barrel) 54.2 69.0 70.0 70.0 70.0 70.0 70.0 70.0 Uranium prices (US$/Kg) 34.0 35.0 40.0 40.0 40.0 40.0 40.0 40.0 Exchange rate (CFAF/US$) 580.9 553.1 560.5 553.1 549.9 545.2 542.8 542.8 Exchange rate (CFAF/EUR) 656.0 656.0 656.0 656.0 656.0 656.0 656.0 656.0 Source: Niger authorities; IMF and World Bank staff estimates and projections, 2018. nominal appreciation of 1.1 percent is projected for the CFAF against the U.S. dollar between 2018 and 2023, followed by no depreciation from 2024 on. Additional important exogenous variables are largely consistent with pro- jections in the IMF’s World Economic Outlook. Notably, uranium and oil prices are projected to stabilize at around US$40 per kg of uranium and US$70 per barrel of crude oil between 2018 and 2035 (Table 8). The GoN aims to achieve its fiscal consolidation objectives in line with the ongoing reform program and the goal of meeting the West African Economic and Monetary Union (WAEMU) deficit target of no more than 3 percent of GDP by 2020. The overall fiscal deficit is projected to decline gradually from 4.5 percent of GDP in 2019 to 2.0 percent of GDP in 2023 and to be maintained at this level from 2024 on (Table 9). Consequently, government debt is projected to decline from 49.3 percent of GDP in 2017 to 47.4 percent between 2018 and 2023 and 36.8 percent from 2024 to 2035. Domestic revenue mobilization will remain the main vehicle for supporting consolidation, and expenditure rationalization will also contribute and serve as a second line of defense should revenues fall short. Domestic revenue would be expected to rise on the back of full implementation of ongoing and planned tax reforms. The GoN has adopted several tax policy and tax administration reforms since 2017, includ- ing removing value-added tax exemptions for some goods and services to harmonize government policy with WAEMU standards, tightening fiscal incentives in the investment code, creating new taxes,9 computerizing 9. New taxes include a housing tax, a higher proxy tax for small businesses, minimum taxes for capital gains and real estate transactions, and a levy on cable network subscriptions. iSOEF Module 2: Assessment of Fiscal Risks from SOEs in Niger 25 TABLE 9: Central Government Financial Operations under Baseline Scenario, 2017–35 (% of GDP)   2017 2018 2019 2020 2021 2022 2023 2024–35 Est. Proj. Proj. Proj. Proj. Proj. Proj. Proj. Total revenues and grants 21.2 24.0 24.0 24.9 24.5 24.9 24.9 24.7   Tax revenues 13.1 15.0 14.9 15.8 16.3 17.3 17.7 18.1   of which taxes paid by 5 SOEs 0.2 0.1 0.1 0.2 0.2 0.2 0.2 0.3   Nontax revenues 1.0 1.1 0.6 0.6 0.6 0.7 0.6 0.7   of which dividends paid by 5 SOEs 0.0 0.1 0.1 0.2 0.2 0.2 0.3 0.4  Grants 6.7 7.6 8.1 8.0 6.9 6.3 5.8 5.0   Other revenues 0.3 0.2 0.3 0.3 0.4 0.4 0.4 0.5 Total expenditures 26.8 28.5 28.4 27.9 27.1 27.0 26.9 26.7   Current expenditures 14.1 13.5 13.5 12.9 12.7 12.5 12.4 11.2   of which current transfers 4.6 4.2 4.3 4.2 4.1 4.2 4.2 4.0   of which received by 5 SOEs 0.4 0.3 0.3 0.3 0.3 0.2 0.2 0.1   Capital expenditures 12.7 15.0 15.0 14.9 14.4 14.4 14.5 15.5 Central government balance –5.7 –4.4 –4.5 –2.9 –2.6 –2.1 –2.0 –2.0 Central government debt 49.3 49.7 50.5 49.2 48.1 44.5 42.7 36.8 Source: Niger authorities; IMF and World Bank staff estimates and projections, 2018. customs and tax payments, and rolling out the Automated System for Cus- toms Data in the main border posts. Full implementation of these reforms will be necessary to achieve the government’s fiscal objectives. In addition, new planned reforms include improving the regulatory framework for tax exemptions, strengthening tax and customs administration, and combatting smuggling in the oil sector. Those reforms are expected to increase tax rev- enue from 14.9 percent of GDP in 2019 to 17.7 percent in 2023, to an average of 18.1 percent between 2024 and 2035. Taxes and dividends paid by the five SOEs examined in this study are expected to contribute to this improved performance, for instance about 60 percent of nontax revenue is expected to be generated by the five SOEs (Table 9). Expenditure rationalization will support fiscal consolidation over the medium term. Total expenditure would decline from 28.6 percent in 2019 to 26.9 percent of GDP in 2023, to 26.7 percent of GDP between 2024 and 2035. Recurrent spending would decrease from 13.5 percent of GDP to 12.4 percent of GDP, to 11.2 percent over the same period. The expenditure rationalization is explained by the decline in spending on goods and services and on wages and salaries. Subsidies and transfers will be maintained at 26 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger 4.2 percent of GDP, on average, between 2019 and 2023, including 0.3 per- cent to be granted to the five SOEs on which this study focuses. Capital expenditure is projected to average 14.5 percent of GDP between 2019 and 2023 and 15.5 percent of GDP between 2024 and 2035 to finance major development investment needs. Grants and concessional borrowing would remain high during 2019 and 2020 and decline thereafter. The financial performance of the five key SOEs and their net contri- bution to the central government budget are projected to improve. The operating balance is expected to increase from 0.12 percent of GDP in 2017 to 0.50 percent of GDP in 2018–23, to 0.90 percent of GDP between 2024 and 2035. Over the same period, the net contribution to the central government budget is projected to improve from –0.17 of GDP in 2017 to –0.11 percent of GDP and then to 0.50 percent of GDP in 2024–35. Tax and dividends will be the main drivers of SOEs’ improved net contribution to the government. By contrast, subsidies and transfers to SOEs are expected to decline as a share of GDP from 0.36 percent in 2017 to 0.22 percent in 2023, to 0.15 percent between 2024 and 2035 (Table 10). The debt stock of the five SOEs is projected to increase between 2018 and 2023 and then decline thereafter. The debt of the five SOEs examined in this study is projected to increase from 6.20 percent of GDP in 2018 to 8.93 percent of GDP in 2023, before falling to 4.7 percent of GDP between 2024 and 2035. More than 50 percent of the debt of the five SOEs is—and will continue to be—driven by the debt of SPEN in line with their financing composition (Table 11). TABLE 10: Proxy Fiscal Risk Indicators for Five SOEs in Aggregate under Baseline Scenario (% of GDP) 2017 2018 2019 2020 2021 2022 2023 2018–23 2024–35 Est. Proj. Proj. Proj. Proj. Proj. Proj. Proj. Proj. Operating balance 0.12 0.22 0.37 0.45 0.52 0.65 0.73 0.49 0.90 Net contributions to central –0.17 –0.11 –0.05 0.12 0.16 0.19 0.31 0.11 0.50 government budget   Taxes paid 0.19 0.14 0.14 0.18 0.20 0.20 0.24 0.18 0.29   Dividends paid 0.01 0.07 0.11 0.21 0.23 0.23 0.29 0.19 0.36  Transfers from central 0.36 0.32 0.29 0.27 0.26 0.24 0.22 0.27 0.15 government Gross debt stock 8.70 8.67 8.48 8.42 8.36 7.78 7.52 8.20 6.05 Net debt 5.72 5.83 5.72 5.73 5.71 5.31 5.13 5.60 3.97 Source: World Bank staff projections. iSOEF Module 2: Assessment of Fiscal Risks from SOEs in Niger 27 TABLE 11: Debt Stock for Five SOEs under Baseline Scenario, 2018–35 2017 2018 2019 2020 2021 2022 2023 2024–35 Est. Proj. Proj. Proj. Proj. Proj. Proj. Proj. SOPAMIN CFAF millions 8,834 8,149 7,402 8,587 9,519 7,485 7,687 5,876 % of GDP 0.19 0.16 0.14 0.17 0.19 0.15 0.15 0.04 SONIDEP CFAF millions 70,935 68,262 66,823 71,357 77,285 75,371 82,251 101,471 % of GDP 1.50 1.33 1.30 1.39 1.51 1.47 1.60 0.74 OPVN CFAF millions 35,340 46,436 55,576 64,073 72,108 77,276 84,254 78,183 % of GDP 0.75 0.90 1.08 1.25 1.40 1.50 1.64 0.57 SPEN CFAF millions 163,08 175,711 188,614 202,768 217,841 233,084 249,467 413,748 % of GDP 3.45 3.42 3.67 3.95 4.24 4.54 4.86 3.01 CAIMA CFAF millions 17,762 19,939 22,976 25,686 29,361 32,174 34,934 46,329 % of GDP 0.38 0.39 0.45 0.50 0.57 0.63 0.68 0.34 TOTAL CFAF millions 295,930 318,496 341,391 372,471 406,115 425,390 458,594 645,608 % of GDP 6.26 6.20 6.65 7.25 7.91 8.28 8.93 4.70 Source: World Bank staff projections. Stress Test Scenarios Show Significant Fiscal Risk from SOEs in Niger Macroeconomic and some sector-specific shocks have been identified as the most likely sources of risk to the financial health of SOEs and to Niger’s central government budget. Before stress tests can be conducted, the source of potential shocks, their likelihood, and the impact on both SOEs and the central government budget need to be assessed. This analysis found that reduced external demand for oil and uranium, a deterioration in the security situation, unfavorable weather conditions and/or natural disasters, a deterioration in SOE governance, and reduced domestic demand would be the most significant sources of risk, which could have a medium to high impact on the financial health of SOEs in Niger and on the central govern- ment budget. By contrast, the likelihood and impact of shocks related to a rise in interest rates and a depreciation or devaluation of the CFAF have been rated low (Annex 4). There are significant differences across SOEs in the sensitivity of revenues and expenses to macroeconomic shocks. The impact of these shocks is likely to vary, both across SOEs and over time, reflecting the inten- sity of the shock, the nature of each SOE’s business, its economic and finan- cial structure, and its regulatory regime. Sensitivity analysis was undertaken 28 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger TABLE 12: Elasticity of Spending and Revenues among Five SOEs Elasticity Elasticity of Revenues to Changes SOE of Spending in Domestic Demand CAIMA 0.3 0.8 OPVN 1.5 1.6 SONIDEP 0.25 0.45 SOPAMIN 0.3 0.75 SPEN 0.2 1.2 to gain a sense of the magnitude of the effect of macroeconomic shocks on revenues and expenses for each SOE. This analysis found that the elasticity of spending with respect to changes in oil prices is less than one for all five selected SOEs. Because Niger is an oil producer and exporter and oil prices are fixed (both from the SORAZ refinery and at the pump), changes in oil prices do not significantly affect the costs of the five selected SOEs. The elas- ticity of revenue to changes in oil prices is close to one for SONIDEP, given that it exports refined oil at flexible prices on international markets. Spend- ing and revenue elasticities to changes in uranium prices are significant only for SOPAMIN, at an estimated 0.26 for expenses and 0.86 for revenues. The estimated elasticity of spending to changes in domestic demand are small for all five SOEs (Table 12). This is because some expenses are rigid—such as wages and salaries, and depreciation and maintenance (SPEN)—whereas others depend mostly on the SOEs’ own spending policies. The elasticity of expenses and revenues to exchange and interest rate changes is minor. Sensitivity analysis of the revenues and expenses of the five selected SOEs to changes in the exchange rate and interest rates were small, as Niger is a member of WAEMU and uses the CFAF, which is pegged to the euro. In addition, the five selected SOEs do not have debt lia- bilities denominated in foreign currencies, and the interest rate is fixed. Three stress test scenarios are considered.10 The first evaluates the potential effects of a decline in oil and uranium prices on international mar- kets. The second consists of a combination of the first shock and a reduction 10. The decision on the precise size of the shock is guided by a country’s historical experience. According to IMF guidance, the size of the shock should be in the range of one to two standard deviation(s) from the average volatility experienced in the past. When the stress test includes combined shocks, the size of each shock can be reduced to one-half of a standard deviation from the average volatility experienced in the past. Using this guidance, the analysis in this study uses one-half of a standard deviation from the average volatility experienced in the past for each variable. iSOEF Module 2: Assessment of Fiscal Risks from SOEs in Niger 29 in domestic demand proxied by real GDP. The decline in domestic demand has a negative impact on SOEs’ financial health and, therefore, on the central government budget and debt. The third stress test uses a combination of the above shocks, together with a shock to contingent liabilities, which assumes that all five SOEs will have difficulties in paying back their debt such that the government must bring them fully onto its balance sheet as a way of bailing them out and avoiding bankruptcy, given their important role for Niger’s socioeconomic development. The operating balance of the five SOEs deteriorates under resource price and demand shocks when compared to the baseline. The aggregate impact of a 23.5 percent reduction in oil prices and a 27.5 percent reduction in uranium prices in 2020 would reduce the operating balance of the five SOEs by 0.5 percentage points of GDP, on average, between 2020 and 2024, compared to the baseline. A 4 percent decline in domestic demand in 2020, together with the above-specified decline in oil and uranium prices, would reduce the operating balance of the five SOEs by 0.47 percentage points of GDP per year between 2020 and 2023 and by 0.56 percentage points per year from 2024 on, again compared to the baseline (Figure 4). The most heavily affected SOE would be SONIDEP, as almost all of its operating revenues FIGURE 4:  Operating Balance of Five SOEs (% of GDP) 1.0 0.8 0.6 Percent of GDP 0.4 0.2 0.0 –0.2 –0.4 –0.6 12 14 16 18 20 22 24 26 28 30 32 34 Year Baseline Oil and uranium prices and real GDP growth shock Oil and uranium prices shock only Source: World Bank staff projections. 30 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger depend on the sale of petroleum. Although the remaining four SOEs would benefit to some degree from a decline in oil prices, this effect would not off- set the adverse impact on SONIDEP because spending on oil is a very small share of the total expenses of the four other SOEs. SOEs’ net contribution to the budget deteriorates under two stress test scenarios. A 23.5 percent fall in oil prices and 27.5 percent drop in ura- nium prices in 2020 would reduce the five SOEs’ net contribution to the cen- tral government budget by 0.17 percentage points of GDP between 2018 and 2023 and by 0.5 percentage points of GDP between 2024 and 2035 (Figure 5). A decrease in an SOE’s operating fiscal balance affects its net contribution to the central government via reduced taxes and dividends and constitutes the main channel through which the five SOEs could become a source of fiscal risk on the revenue side. Taxes would decline by 0.06 percent of GDP between 2018 and 2023 and by 0.19 percent of GDP between 2024 and 2035 (Figure 6). Dividends would fall by 0.1 percent of GDP between 2018 and 2023 and by 0.31 percent of GDP between 2024 and 2035 (Figure 7). Trans- fers to SOEs are kept the same as in the baseline scenario for all stress test FIGURE 5:  Net Contribution to the Budget of Five SOEs (% of GDP) .6 .4 Percent of GDP .2 .0 –.2 –.4 12 14 16 18 20 22 24 26 28 30 32 34 Year Baseline Oil and uranium prices and real GDP growth shock Oil and uranium prices shock only Source: World Bank staff projections. iSOEF Module 2: Assessment of Fiscal Risks from SOEs in Niger 31 FIGURE 6:  Total Dividends Paid by Five SOEs (% of GDP) .32 .28 .24 Percent of GDP .20 .16 .12 .08 .04 12 14 16 18 20 22 24 26 28 30 32 34 Year Baseline Oil and uranium prices and real GDP growth shock Oil and uranium prices shock only Source: World Bank staff projections. FIGURE 7:  Total Taxes Paid by Five SOEs (% of GDP) .40 .35 .30 Percent of GDP .25 .20 .15 .10 .05 .00 12 14 16 18 20 22 24 26 28 30 32 34 Year Baseline Oil and uranium prices and real GDP growth shock Oil and uranium prices shock only Source: World Bank staff projections. 32 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger FIGURE 8:  Gross Debt of SOEs (% of GDP) 12 Percent of GDP 10 8 6 4 12 14 16 18 20 22 24 26 28 30 32 34 Year Baseline Oil and uranium prices and real GDP growth shock Oil and uranium prices shock only Source: World Bank staff projections. scenarios. This assumption may change depending on how the government would respond to the shocks, for example by increasing transfers. For the sake of simplicity, they are assumed not to be affected. The debt of the five SOEs increases under two stress test scenarios. Resource price shocks would increase the five SOEs’ gross and net debt by 1.36 percentage points of GDP between 2020 and 2023 and by 2.04 percentage points from 2024 on, compared to the baseline. The second stress test, reflect- ing a joint resource price and demand shock, would increase gross debt by 1.87 percentage points of GDP between 2020 and 2023 and by 2.82 percentage points of GDP between 2024 and 2035 (Figure 8). Net debt, on the other hand, would decline by 1.77 percentage points of GDP between 2020 and 2023 and by 2.74 percentage points of GDP between 2024 and 2035 (Figure 9). The fiscal balance would deteriorate by 0.5 percent, and central gov- ernment debt would increase by 3.4 percent of GDP under reasonable stress test scenarios. The aggregate impact of a 23.5 percent reduction in oil prices and a 27.5 percent reduction in uranium prices in 2020 would be a drop in the central government’s overall fiscal balance by 0.4 percentage points of GDP between 2020 and 2023 and by 0.5 percentage points from 2024 on, compared to the baseline (Figure 10). Consequently, central gov- ernment debt would increase by 0.7 percentage points of GDP during 2020–23 and by 3.4 percentage points during 2024–35 under the first stress ­ iSOEF Module 2: Assessment of Fiscal Risks from SOEs in Niger 33 FIGURE 9:  Net Debt of SOEs (% of GDP) 8 7 Percent of GDP 6 5 4 3 2 12 14 16 18 20 22 24 26 28 30 32 34 Year Baseline Oil and uranium prices and real GDP growth shock Oil and uranium prices shock only Source: World Bank staff projections. FIGURE 10:  Fiscal Balance (% of GDP) –1 –2 –3 Percent of GDP –4 –5 –6 –7 –8 –9 –10 12 14 16 18 20 22 24 26 28 30 32 34 Year Baseline Oil and uranium prices and real GDP growth shock Oil and uranium prices shock only Source: World Bank staff projections. 34 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger FIGURE 11:  Central Government Debt (% of GDP) 52 48 44 Percent of GDP 40 36 32 28 24 12 14 16 18 20 22 24 26 28 30 32 34 Year Baseline Oil and uranium prices and real GDP growth shock Oil and uranium prices shock only Source: World Bank staff projections. test scenario (Figure 11). As all variables are computed as a share of GDP, any impact on GDP will affect both the numerator and denominator in the same direction, such that the second stress test scenario’s impact on the fiscal bal- ance and central government debt is almost the same as that of the first stress test scenario. Increased strains on SOEs will have both direct and indirect impacts on the central government budget. Central government debt would rise by 11.6 percent of GDP under a stress test capturing extreme contingent liabilities. If the central gov- ernment extended full fiscal coverage from the central government level to the public sector level—that is, if SOE and central government debt were consolidated from 2020 on—then central government debt would increase by 7.0 percent of GDP, on average, during 2020–35—by 8.0 percent of GDP during 2020–23 and by 6.0 percent of GDP from 2024 on—as compared to the baseline scenario. If this shock were combined with the above-described shocks to oil and uranium prices and domestic demand, central government debt would increase by 11.6 percent of GDP, on average—by 10.1 percent of GDP during 2020–23 and by 12.1 percent of GDP during 2024–35 (Figure 12). This stress test scenario is a proxy for an implicit contingent liability shock. It aims to assess the impact on central government debt if all five SOEs were to experience difficulties in paying back their debts, such that the govern- ment would need to bring them onto its own balance sheet as a way of iSOEF Module 2: Assessment of Fiscal Risks from SOEs in Niger 35 FIGURE 12:  Consolidated Central Government Debt and Debt of Five SOEs (% of GDP) 60 56 52 48 Percent of GDP 44 40 36 32 28 24 12 14 16 18 20 22 24 26 28 30 32 34 Year Baseline (without SOEs debt) Baseline (with SOEs debt) Oil and uranium prices and real GDP growth shock Source: World Bank staff projections. bailing them out. In this context, instead of gross debt, the net debt of SOEs is used as the implicit contingent liability shock to the central government because either the government or SOEs could use liquid assets to pay back part of the debt. In sum, although the quantified effects constitute relatively conser- vative estimates, they would still be difficult to manage given the cur- rent lack of fiscal space in Niger. Furthermore, the impact of less likely, more severe macroeconomic shocks, such as those associated with a global or regional economic crisis, would be much larger and much more difficult to address. Moreover, the analysis represents only the impact based on five out of 164 SOEs—and, although these SOEs were selected based on their size and perceived fiscal risk, other SOEs may add substantially to the overall fis- cal risk. Finally, the stress tests do not account for sector- and SOE-specific sources of risk (for example, related to capital investment programs, regula- tory price setting, and natural disasters), which might increase the estimated fiscal risks. 36 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger CHAPTER 4 iSOEF Module 4: Corporate Governance and Accountability Mechanisms Legal and Regulatory Framework Several ordinances adopted in 1986 foresaw four types of state-owned enterprises and agencies in Niger and determined their governance regime.11 Texts distinguish between industrial and commercial public 11. These include: (a) Ordinances No. 86-001 and 86-002 of January 10, 1986, relating, respectively, to the general regime of public agencies, state-owned companies and companies with mixed ownership and determining the trusteeship and the control of public agencies, state-owned companies and companies with mixed ownership; (b) Decree No. 86-002/PCMS/ MEP/SEM of January 10, 1986, providing detailed rules for the exercise of oversight of public agencies, state-owned companies and companies with mixed ownership; (c) Decree No. 86-120/ PCMS/MTEP/SEM of September 11, 1986, relating to the approval of the model statutes of public establishments of an administrative nature; (d) Decree No. 86-121/PCMS/MTEP/SEM of September 11, 1986, relating to the approval of the model statutes of public establishments of an industrial and commercial character; (e) Decree No. 86-122/PCMS/MTEP/SEM of September 11, 1986, relating to the approval of the model statutes of state corporations or corporations with mixed ownership; (f ) Decree No. 86-123/PCMS/MTEP/SEM of September 11, 1986, relating to the approval of the model statutes of companies with mixed ownership; (g) Decree No. 86-154/ PCMS/MTEP/SEM of October 23, 1986, concerning the general status of the staff of public agencies of industrial and commercial character, state-owned companies and companies with mixed ownership; and (h) Decree of January 21, 1987, concerning the statutes of different groups staff of EPICs, SEs, and SEMs and determining their conditions. of 37 ­ ntities, administrative public entities, state-owned companies, and partially e state-owned companies. The corporate governance regime of these four types of SOEs is governed by a common legal framework. Among the four types of SOEs in this study, EPAs are the most similar to government depart- ments, although they are more autonomous in the management of their operations than an ordinary department. Ordinance No. 1 of 1986 establishes an SOE monitoring system, as well as rules relating to financial information and audits. Implementation decrees adopted following the ordinance include a specific statute for each type of entity. Each institution and public company must have an internal regulation providing specific details about its corporate governance and operations (such as shares, equity, composition of the board of directors, and so on). Other types of SOEs are governed by different legal texts, creating unnecessary complexity and fragmentation. There are approximately 40 SOEs in Niger that do not fall under the four abovementioned categories and are instead subject to a separate legal framework: nine professional pub- lic institutions (EPPs), established in accordance with Act 95-017 of Decem- ber 8, 1995;12 eight social public agencies (EPSs), established in accordance with Act 2003-33 of August 5, 2003;13 fifteen scientific cultural and technical public agencies (EPSCTs), established in accordance with Order 2010-77 of December 9, 2010, on the general regime of EPSCTs;14 two public financing agencies (EPFs), established in accordance with Ordinance 99-54 of Novem- ber 22, 1999;15 and eight others (Régie, Sans status, SCP).16 There is no gen- eral legal framework for these. EPSs, EPSCTs, EPFs, and the others are created by law, and their statutes are adopted by decree. All of these institu- tions, including the eight others, are equipped with a legal personality, exer- cise administrative and financial autonomy, and apply public accounting rules. The existence of multiple legal frameworks creates unnecessary com- plexity and fragmentation in the SOE sector and makes sector oversight challenging. While SEs, EPICs, and EPAs are established by legislation, their legal framework could be more comprehensive. Article 5 of Ordinance 86-001 of January 10, 1986, establishing the general regime of the various types of SOEs (SEs, EPICs, and EPAs), stipulates that they are created by legislation 12. For example, the Chamber of Commerce, Agriculture, Industry and Crafts of Niger. 13. For example, the National Agency for the Promotion of Employment. 14. For example, the National Institute of Agronomic Research of Niger or the National Museum of Niger. 15. For example, the Investment Fund for Food and Nutritional Security and the Caisse des Dépôts et Consignations. 16. For example, the Nuclear Regulatory and Safety Agency or the High Authority for the Fight against Corruption and Assimilated Offenses. 38 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger and that their statues are adopted by decree. The initiative for the creation of an EPA, EPIC, SE, or SEM is the responsibility of the central government or local governments according to Article 2 of Ordinance 86-001. The same article indicates that SEs, EPAs, and EPICs are created to accomplish public service activities. Article 12 of Ordinance 86-001 indicates that the mission of EPAs is to fulfill a task that is normally vested in the state and has no com- mercial or industrial character. Article 21 of Ordinance 86-001 indicates that EPICs’ objectives are to exercise industrial and commercial activities with a public service mission. Article 3 stipulates that SEs and SEMs can be created to promote certain industrial and commercial activities. Interviews con- ducted during the preparation of this study revealed that, in practice, the creation of a new EPA, EPIC, SE, or SEM derives mainly from the ministry that would have technical oversight over it, with no formal consultation with the MoF or other concerned stakeholders. There are no established eco- nomic, financial, or technical criteria for justifying the creation of new agen- cies. Finally, there is no obligation to carry out an economic, financial, social, or environmental impact study prior to the creation of new agencies or SOEs. As a result, to be funded, an EPA must write a justification to its tech- nical oversight ministry and to the MoF. Currently, the DEP/PE does not have the authority to coordinate and oversee this process. Although 100 percent state owned and fulfilling a public service mandate, EPICs are governed by private commercial laws.17 While the legal regime for EPICs has commonalities with that of EPAs—as both are legal entities under public law—the function of an EPIC may be similar to that of an SE or SEM, as all three of these entities pursue a commercial or industrial objective and are expected to operate like a business by maximiz- ing profit, although they can still benefit from government support. The main difference between EPICs on the one hand and SEs and SEMs on the other lies in the fact that EPICs have a public service mandate, while SEs and SEMs do not. EPICs that receive government subsidies must apply public procurement rules for contracts that exceed a threshold set by the MoF. SEs and SEMs operate in accordance with commercial laws and reg- ulations. SEs, whose capital is owned 100 percent by the state, and SEMs, in which the state holds fewer than 100 percent of shares, have a profit-­ maximizing objective (Article 30 of Ordinance 86-001) and operate accord- ing to the applicable private commercial law (Article 30 and Article 33). All SEMs must be incorporated as limited liability companies in accordance with Article 33. Like EPICs, SEs and SEMs that receive government 17. Title II, Chapter 3 of Ordinance 86-001, and Decree 121/1986 governing EPICs; Title III, Chapter 1 of Ordinance 86-001, and Decree 86-122/PCMS/MTEP/SEM of September 11, 1986. iSOEF Module 4: Corporate Governance and Accountability Mechanisms 39 subsidies must apply public procurement rules for contracts for works, goods, and services that exceed a threshold set by the MoF. The purchase or sale of SEM shares is carried out by government decree.18 Private commercial law in Niger, which applies to EPICs, SEs, and SEMs, is governed by the OHADA Regulation. Niger ratified the revised treaty, signed in Quebec City on October 17, 2008, relating to the Organiza- tion for the Harmonization of Business Law in Africa on October 29, 2009. The Uniform Acts contain rules of substantive law that, once adopted, apply to all member states and shall prevail over any contrary domestic legislation, in accordance with Article 10 of the OHADA Treaty (Annex 9). Niger’s legal framework provides for general and direct oversight of EPAs, EPICs, SEs, and SEMs. In accordance with Articles 4–6 of Ordi- nance 86-002, the objective of the general oversight function (tutelle générale) is to harmonize the general guidelines of the state’s policies vis-à- vis public agencies, SEs, and SEMs. General oversight applies to EPAs, EPICs, SEs, and SEMs in which the state holds more than one-third of the social capital; those whose activities are of “strategic interest,” as determined by the state; or those that receive loans, grants, guarantees, or advances from the state. No department currently appears to ensure the general oversight role, as this function is not clearly allocated to any particular ministry (the MoF, for example). The objective of the direct oversight function (tutelle directe), according to Article 7 of Ordinance 86-002, is to ensure technical, financial, and administrative controls. Direct oversight is ensured by the sec- toral ministry under whose jurisdiction an EPA, EPIC, SE, or SEM operates. Several regulatory authorities (telecommunications, water, transport, and electricity) have been created over the past recent years, but the current legal framework does not recognize their role. Although legal dispositions for the transmission of information exist, they lack detail and are not systematically followed. Decree 86-002 indicates that EPAs, SEs, and EPICs must communicate budgetary information—such as budgets, annual work programs, estimates of revenue ­ and expenditure, financial accounts at the end of the financial year, and debt information—to the direct oversight ministry and the MoF. Chapters 1 and 2 of Decree 86-002 even stipulate that the MoF must be associated with deci- sions concerning these aspects. These requirements in the legal texts lack detail, however, and do not cover all pertinent information, such as annual reports, management reports, the reports of the statutory auditor, minutes of the meetings of the board of directors, and budgets. In practice, little 18. Art. 32 of Ordinance 1/1986. 40 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger information is transmitted to the MoF, owing to several factors: the informa- tion is often not produced, there is a lack of knowledge of the rules in place, and SOEs have weak incentives to comply with the rules, especially given the absence of sanctions if information is not transmitted. Decisions of EPA and EPICs become final only after the approval of the oversight ministry and other ministries concerned. Some provisions, notably for debt, must be spec- ified in MoF orders. Yet these provisions have not been adopted. For SEMs in which state participation is greater than one-third of the capital, decisions do not become final until after receiving joint approval from the ministry of direct oversight, the MoF, and the ministry in charge of general oversight (Article 8 of Decree 86-002).19 Governance provisions are similar for all four types of SOEs, although the ordinances do not present SOE governance arrangements comprehensively or consistently. Part of these arrangements are detailed in the model statutes. Annex 1 indicates that the provisions related to the main areas of governance are relatively similar among different types of SOEs. Contrary to SEs and SEMs, EPAs and EPICs do not have general assemblies of shareholders. In the case of SEMs, the legal texts clearly stipu- late the functioning when the state is the majority shareholder and when the SEM exercises “strategic” activities, even if the state is a minority share- holder. In this case, the state plays an important role because it nominates the chair of the board of directors, who is also president of the general assembly (GA), except when the law establishing the SEM indicates other- wise. When the state has minority ownership, the model statutes indicate that the GA is presided over by the chair of the board of directors, who in turn is elected from among the representatives of the GA. In all cases, when the state designates a board chair, this is done by decree based on the pro- posal of the minister in charge of general oversight. The members of the board of directors designated by the state are nominated by an order of the minister in charge of general oversight based on the proposal of the minister of direct oversight. Concerning their financial reporting and audit, SEs, SEMs, and EPICs are subject to the legal framework applicable to the private sec- tor. SEs, SEMs, and EPICs are subject to private sector rules relating to the preparation, audit, and publication of financial statements, in accordance with the requirements of the revised OHADA accounting system 19. Decisions taken in application of Decree 86-002 are notified to the ministry of direct oversight, which shall inform the other concerned ministers who must give their approval in writing. Article 11 of the decree stipulates that the decisions are final if a response is not given within a period of 30 days after the request for decision approval. iSOEF Module 4: Corporate Governance and Accountability Mechanisms 41 ­ SYSCOHADA).20 Both EPICs and SEs must be subjected to an annual audit ( of their financial statements, performed by one or more statutory auditors that have been selected from a list agreed with the tribunals and appointed by the board of directors. In practice, the auditors are private audit firms that are members of the National Institute of Chartered Accountants (ONECCA) in Niger. The Court of Auditors has a mandate to audit SEs, SEMs, and EPICs,21 yet conducts few audits due to capacity and resource limitations. The legal and regulatory framework that applies to SEs, SEMs, and EPICs does not specify their obligations to prepare an audit of annual financial statements. Adopted to replace the Uniform Act of March 24, 2000, relating to the orga- nization and harmonization of business accounting, the new Uniform Act of January 26, 2017, relating to the accounting law and financial information, entered into force on January 1, 2018, and includes the revised SYSCOHADA as an annex. The revised SYSCOHADA includes both the OHADA General Accounting Plan and the accounting regime for consolidated and combined accounts; yet only a small number of EPICs, SEs, and SEMs follow the new accounting regime, and they lack the technical capacity to implement it. For the personal accounts of entities and (as of January 1, 2019) for the consoli- dated accounts, the combined accounts and financial statements are pro- duced according to the International Financial Reporting Standards (IFRS). In addition to Niger’s listed companies (Bank of Africa Niger is the only Nige- rien publicly traded company on the regional stock exchange, the Bourse Régionale des Valeurs Mobilières, or BRVM), shareholding companies with more than 100 shareholders are required to apply the IFRS. Currently, only two companies are subject to this requirement as of 2019. EPAs are subject to public law and all public accounting rules. In accordance with Article 15 of Ordinance 86-001 of January 10, 1986, estab- lishing the general system of public agencies, state-owned enterprises, and enterprises with mixed ownership, EPAs are subject to public law, except in cases where a derogation is provided for explicitly by the law. Article 14 stip- ulates that EPAs are subject to all public accounting rules. They have the treasurer general as their accounting officer, must submit to the national treasury the funds they have available, and must perform all operations related to revenues and expenditure by the intermediary of the National Treasury. Article 15 requires that EPAs submit to public procurement rules. Article 20 provides that a financial controller is appointed by order of the 20. Major SOEs could benefit from applying International Financial Reporting Standards (IFRS) to further improve the quality of the accounting of these SOEs. 21. According to the Ordinance, the auditors must be chosen from a list of accredited auditors held by the courts; in practice, auditors authorized by ONECCA are considered accredited. 42 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger minister of finance. Although the Court of Auditors is responsible for audit- ing EPAs, it only manages to audit a limited number of them due to low capacity. The EPAs do not present their accounts according to the public sector accounting plan and, as a result, the presentation of their financial information is not standardized. Following the significant development of replacing Niger’s public finance regulations with WAEMU directives, EPAs will have to comply with public finance rules laid out in the Code of Trans- parency, the Organic Law of Finance, public accounting regulations, the state’s budget nomenclature, the state’s accounting plan, and the state’s table of financial operations.22, 23 These regimes provide for a large number of changes, in particular the introduction of program budgeting. For the moment, only a limited number of EPAs have begun to follow the new rules on public finance management. SOEs have a high level of autonomy in terms of human resources, and each establishment or undertaking has arrangements specific to its own particular statute. A decree dated January 21, 1987, defines the model stat- ute for SOE personnel. Based on this decree, each SOE adopts a statute that determines the regime governing its employees, and each has autonomy to make decisions relating to hiring and remuneration, even in the case of loss- making entities. The texts do not provide a specific statute for SOE staff and do not require that SOEs communicate information on their workforce or personnel costs to the government. Consequently, there are no centralized data on the size and evolution of the SOE workforce and wage bill. Ownership and Oversight Function In Niger, SOEs are subject to a de facto dual oversight model, in which the MoF is responsible for financial oversight while sectoral ministries are responsible for technical oversight. This oversight model implies shared responsibilities, with the MoF monitoring the economic efficiency and budgetary impact of SOEs’ performance, and sector ministries oversee- ing SOEs’ technical performance. Ordinance 86-002 of January 10, 1986, determining the oversight (tutelle) and control of SOEs foresees a general oversight function (tutelle générale) and a direct oversight function (tutelle directe), with a role conferred to the MoF. As such, the general oversight function, which was originally assumed by the former Ministry of Public 22. Act No. 2014-07 of April 16, 2014, on the adoption of the Code of Transparency in the management of public finances within WAEMU. 23. Act No. 2012-09 of March 26, 2012, on the organic law relating to finance laws. iSOEF Module 4: Corporate Governance and Accountability Mechanisms 43 Enterprises, is no longer ensured and has not been updated in the Ordinance. Sectoral ministries are responsible for technical oversight of SOEs and defining public policies for the sector. Ordinance 86-002 also pro- vides for this direct oversight function to have financial and administrative control.24 Interviews conducted for this study highlight that sectoral minis- tries oversee entities in their sector and tend to focus mostly on technical oversight of SOEs. For instance, the Ministry of Mining is responsible for SOEs in the mining sector. In some cases, however, technical oversight is not ensured by the sector ministry. For instance, while the Ministry of Oil over- sees the refinery, SORAZ, it is the Ministry of Trade and Commerce that oversees SONIDEP, which sells gasoline and other petroleum products. While limited, these SOEs have some engineers and sector experts to ensure technical oversight. The DEP/PE’s responsibility for financial oversight is not recog- nized by several SOEs. In addition to financial oversight, the DEP/PE is responsible for overseeing the privatization and liquidation of SOEs. The financial oversight function does not exist in the basic texts of 1986, although Decree 86-002/PCMS/MTEP/SEM of January 10, 1986, assigns an impor- tant role to the MoF in the management of SOEs. The DEP/PE was created without an amendment and clarification to the legal texts of 1986.25 The financial oversight function is mentioned in the statutes of some SOEs, and the DEP/PE is made responsible for it in an MoF decree. A legal instrument that formally establishes this oversight function has not been identified. This legal discrepancy has opened the door to challenges to the legitimacy of DEP/PE’s financial oversight. While the DEP/PE has initiated some activi- ties, such as collecting and analyzing financial information, it has faced chal- lenges in collecting a full dataset, as some SOEs have challenged its legitimacy due to the lack of an adequate legal instrument giving it a formal oversight role. The state’s financial oversight and shareholder roles are weakened by the DEP/PE's institutional positioning. The DEP/PE is currently a department under the MoF’s General Directorate of Financial Operations and Reforms, rather than an independent General Directorate. This status could contribute to its lack of power in exercising financial oversight over SOEs. In addition, since the DEP/PE was created only recently (in 2016), 24. At the international level, there is a growing trend toward consolidating ownership and performance monitoring functions in a single institution (for example, a central ministry or holding structure). 25. The Directorate was created by Decree 0482/MF/SG/DGOF/R of December 8, 2016, on the establishment of the Directorate General of financial transactions and of financial reforms. 44 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger several SOEs do not know its functions, and it sometimes lacks autonomy and authority. To request information from SOEs, for example, the DEP/PE often needs to make the request through the minister of finance, because direct requests are not always taken into consideration. In carrying out its mandate, the DEP/PE faces capacity constraints and resource limitations. The DEP/PE has approximately 10 staff mem- bers who are responsible for the financial oversight of almost 150 SOEs.26 As the department is relatively new, most of its staff lack specialized experience in the field, except the director, who had worked in the former Ministry of Public Enterprises. While the DEP/PE’s staff are highly motivated to carry out the department’s mission, they lack certain specialized skills. For exam- ple, the directorate would benefit from capacity strengthening in the area of financial analysis, legal expertise (the DEP/PE does not have a lawyer who specializes in SOEs), fiscal risk analysis, corporate governance, and other business skills in order to fully exercise its mandate. The oversight and monitoring system is fragmented across several institutions. The absence of an oversight structure since the Ministry of Public Enterprises was dismantled in 2005 has contributed to an accumula- tion of gaps and inefficiencies in SOE oversight. During this interim period, several departments created their own directorates for the financial over- sight of SOEs under their technical oversight (for example, the Ministry of Mines and the Ministry of Commerce). Moreover, at the MoF, several enti- ties outside the DEP/PE oversee specific areas relevant to the management of the SOE portfolio. For example, the General Directorate of the Treasury and Public Accounting (DGTCP) oversees on-lending (dette retrocédée) and the General Tax Directorate follows SOEs’ tax debt. There are also financial control functions foreseen in each SOE that are exercised by financial con- trollers in the MoF’s Directorate of Public Procurement and Financial Con- trol. This directorate is responsible for the control of the regularity of the SOE’s expenditures and revenues. There are not enough financial control- lers to effectively cover all SOEs, however. Finally, their precise function with respect to SOEs is not clearly established and would benefit from legal and operational clarifications. Overall, the state’s monitoring function vis-à- vis SOEs is fragmented. It lacks systematic coordination and regular exchange of information, which limits the development of a global, strategic approach to managing and monitoring the state portfolio. 26. In comparison, South Africa’s treasury department has approximately 40 employees to supervise just under 40 public enterprises. iSOEF Module 4: Corporate Governance and Accountability Mechanisms 45 Boards of Directors and Executive Management All SOEs must have a board of directors,27 and in the case of EPAs and EPICs, the board is the highest decision-making body. The board of directors (conseil d’administration) includes a minimum of three and a maxi- mum of twelve directors. Each director is appointed for a renewable three- year term. For EPAs, EPICs, and SEs, most directors are, by default, government representatives. These always include a representative from the technical oversight ministry and a representative from the MoF. Some boards also include employee representatives. Although the statute of each entity determines the size and composition of the board, these statutes are not always consistent with the requirements set out in the decree. For exam- ple, there are SOEs that have more than twelve members. Government rep- resentatives may not serve simultaneously on more than seven boards of directors of SEMs, EPICs, or EPAs. A similar restriction does not exist for SEs. The Act does not specify whether a member may sit on seven SEM boards, seven EPIC boards, and seven EPA boards at the same time, as the texts only explicitly limit board appointments for each type of entity, with- out mentioning the possibility of cumulative appointments on the boards of various types of SOEs. There are no requirements concerning independent directors. The chair of the board of directors is appointed by government decree.28 The relevant legal texts do not require any minimum specialized experience for directors. The law requires that the directors be appointed, in general terms, based on their integrity and competence,29 but it does not provide clearly for any minimum or specialized experience. The clarity of the board nomination process and the accountability of boards could be strengthened further. The laws do not provide details on the process for appointing directors and the stakeholders who should participate in this process. For example, in contrast to the practice observed in many countries of the Organisation for Economic Co-operation and Development (OECD) and elsewhere, the DEP/PE is not involved in the selection process for board members. In addition, the oversight entity has not developed any criteria or guidelines for harmonizing the selection pro- cess. Even after directors are appointed, their names are not always made public. As a result, there is a risk that the appointment of board members is 27. Decrees 120, 121, 122, and 123 of 1986 establish the requirements relating to SOE boards of directors. 28. Art. 9 of Ordinance 1/1986. 29. Decree 1/1986. 46 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger not based systematically on professional considerations. In addition, the boards do not regularly report on their activities. For example, they do not communicate their meeting agendas and minutes to the DEP/PE, to the technical oversight ministry, or to other organs of the government. This lim- its the government’s ability to properly supervise the work of the boards and constitutes a constraint to their accountability. SEs and SEMs are required to have a general assembly of sharehold- ers, which is the highest decision-making authority of the company.30 At least one GA meeting must be held per year to approve the SOE’s financial statements, decide on dividends and the distribution of profits, and approve the remuneration of directors and auditors. The GA can also propose modi- fications to the objectives of the company or its dissolution and may decide on the acquisition or transfer of shares. In SEMs, the GA includes share- holder representatives. Each shareholder may designate as many represen- tatives as desired, under the condition that during voting sessions, all representatives of a particular shareholder together have only a single vote. In practice, the GAs of SEs duplicate the work of their boards of directors. Given that SEs are fully state owned, the members of the board of directors and the shareholder representatives to the GA are often the same people. In practice, therefore, the GA simply approves the decisions of the board, as the GA meeting is usually held immediately after a board meeting with the same persons present. The functioning of GAs and boards of directors could be made more effective. These bodies play an important role in the governance of SOEs, particularly in financial and budget management. In practice, their effective- ness can be limited. Several factors affect the effectiveness of GAs and boards, notably: • Limited transparency in the nomination process (in that only nominations by decree are published in the Official Journal) and limited consultation (GA presidents and board chairs are, in most cases, nominated by decree on the proposal of the general oversight function; the process for deter- mining government representatives in the GAs is not specified in the legal texts; and the members of the boards of directors are nominated by the minister of general oversight, based on the proposal of the concerned ministers); • Limited definition of selection criteria (there are only general criteria for the selection of board members, and these criteria are often not respected); 30. Decrees 122 and 123 of 1986. The decrees include the model statutes for an SOE and detail the requirements. iSOEF Module 4: Corporate Governance and Accountability Mechanisms 47 • Nonstandardized remuneration conditions with limited transparency, because they are decided by each GA and board and remuneration amounts are not published; • Limited accountability of boards toward the oversight function and the pub- lic, because the minutes and reports of GAs and boards are not transmit- ted systematically to the ownership function or made available to the public; • Skills gaps, as members of GAs and boards often do not have experience or training in the management and oversight of SOEs; • Limited representation of the ownership function in GAs and on boards, because the legal texts do not require representation of financial and technical oversight functions; • Absence of performance criteria to help evaluate the functioning of GAs and boards; and • Limited independence of GAs and boards vis-à-vis oversight ministries. The chief executive of an SOE is nominated through a decree of the President of the Republic for SOEs in which the government owns a majority of shares and by the board for mixed ownership entities with minority state ownership. For all EPAs, EPICs, and SEs, and for SEMs with majority state ownership, the chief executive officer (known as the director général, or DG) is nominated by presidential decree based on pro- posals presented by the technical oversight ministries. For SEMs in which the state has minority ownership, the DG is nominated by the board of direc- tors. The legal texts do not provide for competitive recruitment for DG posi- tions. The DG’s remuneration is in all cases decided by the board of directors. In some SOEs, the DG has ultimate authority, over which the boards and GAs do not exercise effective control. The process for nominating DGs could be more competitive, and their performance could be improved if DGs were subject to perfor- mance criteria. The role of the DG is central for the functioning of an SOE and greatly influences its performance. Several measures could be imple- mented to strengthen the functioning of the DG’s role, including: (i) con- ducting a competitive recruitment process based on clear, comprehensive, and transparent selection criteria; (ii) introducing performance manage- ment for the DG by identifying management performance criteria and strengthening the DG’s accountability to the board; (iii) limiting the role of boards in management (notably by eliminating the board chair’s approval of procurement); and (iv) establishing a clear and transparent remuneration framework for DGs. 48 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger Transparency and Disclosure There is limited access to information or publication of information relating to SOEs in Niger. The main applicable legal texts on EPAs do not include obligations regarding transparency and access to information. The OHADA Act includes provisions on transparency for listed companies only. Consequently, these requirements do not apply to most SOEs in Niger. The public finance management rules, notably the Code of Transparency, con- tain provisions on transparency and public access to information. SOEs are subject to these provisions when they receive grants and financial support from the government. Only a few SOEs adhere to transparent publication mechanisms. An annual audit by an external auditor is required for the financial statements of EPICs, SEs, and SEMs. The auditors are appointed by the company’s GA for a term of six renewable fiscal exercises (World Bank 2009). SOEs are not required to form audit committees, although when they are duly empowered and trained, audit committees can play an important role in ensuring adequate financial controls and the quality of financial information and external audit. Other committees, such as investment committees and remuneration committees can also have positive impacts ­ on SOEs. EPAs are subject to public financial management rules that are only partially applied, and SOE expenditures are therefore weakly recorded in the government’s financial statements. Ordinance 86-001 stipulates that SOEs are subject to the rules of public accounting. Accordingly, EPAs must comply with the general regulation of public accounting.31 In practice, SOEs apply a cash basis of accounting. Although it is possible to identify the amount of development grants received by the SOE, a recent Public Expen- diture and Financial Assessment (PEFA) points out that only 27 of 69 EPAs had submitted their financial data to the MoF in 2014 (IMF 2017). Accord- ingly, approximately 6 percent of their expenditures were considered ineli- gible. Given the absence of financial statements, it is not possible to assess the actual volume of an EPA’s expenditures and own revenues. External audits are not always carried out in practice. It is clear from the interviews conducted in preparing this study that many SOEs do not conduct audits. Some companies refuse to share certain information (such 31. Order 2013-083/PRN/MF of March 1, 2013, on the general regulation of the public accounting. iSOEF Module 4: Corporate Governance and Accountability Mechanisms 49 as letters of affirmation and external confirmations). Audit firms thus face considerable challenges in terms of the availability and quality of data, which reflects the low level of accounting in SOEs. Accordingly, it is rare that accounts are certified. When audits are prepared, some SOEs accept exter- nal circulation. It is sometimes problematic to obtain letters of assertions of audits signed by SOEs. When SOEs have auditors, they are generally recep- tive to their recommendations. Although legal texts require it, these recom- mendations are often not transmitted to the boards of directors. Moreover, there is frequently little progress made in implementing recommendations. Sanctions provided for in the law are not applied. Criminal sanctions can be taken against managers, DGs, members of the executive board, and board directors when they have not established the fiscal year’s balance sheet and other accounting documents accompanied by operations report, when they have knowingly established and communicated financial state- ments unfaithfully, or when they have failed to issue a report on the SOE’s financial situation and fiscal year-end results. These sanctions, as provided for in the Criminal Code of Niger, are rarely applied, given that financial documents are not being deposited to the registries of the courts. ONECCA requires capacity strengthening and additional resources to improve the quality of SOE audits.32 ONECCA has not yet established a quality control review program for its members, such that the control of audit quality is often lacking. The quality assurance system of local audit firms is at a nascent stage. Based on Senegal’s experience, ONECCA has recently begun negotiations to become a member of the International Fed- eration of Accountants and has thus put in place a quality assurance system.33 Although all SOEs are subject to periodic compliance audits by the CdC, the court lacks the resources needed to perform regular audits. The CdC has four chambers, two of which have an external control mandate for SOEs. The first chamber, with a staff of nine, is responsible for the control of government operations and audits of central government agencies and Niger’s 130 EPAs. The third chamber, with eight inspectors assigned to the task, is responsible for the control of financial and accounting management 32. ONECCA consists of four branches: (1) accounting experts (experts comptables), who are physical persons; (2) audit firms that have an accounting expert; (3) chartered accountants (comptables agrées), who are physical persons; and (4) accounting firms (comprising a majority of chartered accountants). Only the accounting experts and audit firms can be external auditors. 33. OHADA has adopted a quality assurance regulation for ONECCAs that is applicable in Niger. A World Bank project is financing the dissemination of the quality assurance system in 17 OHADA member countries, including Niger. 50 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger in the 53 EPICs, SEs, and SEMs as well as other state-funded agencies and organs.34 In the past years, the CdC has published detailed annual reports on the results of controls it has conducted. The Code of Transparency indi- cates that the CdC should publish audit reports that have been transmitted to the parliament, the president, and the government. The court has pub- lished its general public report for 2011–14, including audits of several EPICs, SEs, and SEMs such as CAIMA, S ­ OPAMIN, and OPVN. Although the report for 2015 has been produced and transmitted to the President of the Republic, it has not yet been published. The reports contain a large number of recom- mendations. In 2014, it was reported that 60 percent of recommendations had been implemented. Given its lack of staff and material resources, the CdC can only con- duct audit controls of five or six SOEs each year. As a result, it can only audit each SOE approximately once every 10 years. To remedy this situation, the court has recently begun to use a categorical and thematic approach. Audits over the last year focused on human resources, the social fund, and public hospitals. These more targeted audits allow the CdC to cover more SOEs and maximize its use of human and financial resources. The work of the auditors is not used in an efficient manner. Because auditors’ reports are not usually communicated to the DEP/PE, it cannot fol- low up on their recommendations. The DEP/PE does not have a system for regular communication with SOE auditors. Moreover, SOE directors and boards of directors do not always recognize the value of the work carried out by the auditors as a tool to help improve the quality of their financial ­information—both externally, in terms of the SOE’s communication with the government, and internally for management purposes. The level of internal control in EPICs, SEs, and SEMs could be improved. Although discussions held during the preparation of this study indicated that some EPICs, SEs, and SEMs have internal control mecha- nisms, internal control practices remain poorly developed. According to the most recent Report on the Observance of Standards and Codes (ROSC), Accounting and Auditing, for Niger (World Bank 2009), in most cases reviewed, auditors made reservations or comments that related primarily to 34. These other agencies include other organizations in which the state or public communities have a financial interest, the financial and accounting management of SEMs whose role and activities are of strategic interest as determined by the state, development projects funded by external resources, and any entity that is subject to the control of the Court of Auditors. iSOEF Module 4: Corporate Governance and Accountability Mechanisms 51 shortcomings in the evaluation of certain accounts, assets, and tax risks, and to failures in the internal control system. Transparency requirements relating to SOEs, especially EPICs and EPAs, could be strengthened. SEs and SEMs (unlike EPICs and EPAs) must file their financial statements and minutes of GA meetings at the Reg- istry of the Tribunal of Commerce, but the latter does not check whether these companies have complied with their requirements. Once filed at the registry, the Tribunal of Commerce publishes the financial statements of SEs and SEMs. These statements are not published online on the websites of the Tribunal, the SOEs, the DEP/PE, or other government agencies. There is no legal requirement that any government agency make public the financial statements of EPICs and EPAs or audit reports. Budget execution reports are not published. Although budgets are published annually, in conformity with WAEMU’s Code of Transparency, Niger’s finance laws do not provide detailed information on each EPA, or for all SOEs.35 The audit reports of the Court of Auditors, by contrast, are made public, in compliance with the Code. The names of members of public companies’ boards of directors, of GA shareholder members, and of DGs are not made public. The OHADA Act’s provisions relating to transparency are valid for listed companies only and thus do not apply to SOEs in Niger. Procurement by SOEs SOEs and parastatals that receive subsides are subject to national pub- lic procurement legislation and regulations.36 Procurement by EPICs is managed according to private law and commercial practices, except when they receive subsidies and for procurement above a threshold set by the MoF.37 Procurement by SEMs is managed according to commercial practic- es.38 For EPICs, SEs, and SEMs, bid evaluations are undertaken by a perma- nent commission whose members are appointed by the board of directors. Contracts are signed by the DG, following approval by the board president. Detailed provisions for procurement by SOEs and parastatals are set out in 35. Act 2014-07 of April 16, 2014, adopts the Code of Transparency in the management of public finances within WAEMU. The Laws of Finance of Niger are available on the MoF website: http://www.finances.gouv.ne/index.php/lois-de-finances. The finance laws aggregate revenue and expenditure at the ministerial level, so it is not possible to know whether EPAs are included in the figures. 36. Ordinance 86-001 of January 10, 1986, Title II, Chapter 2, Art. 15. 37. The study team was unable to obtain a copy of the decision establishing this threshold. 38. Order 86-001 of January 10, 1986, Title III, Chapter 1, Art. 31. 52 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger Decision 0135/PM/ARMP of July 24, 2017, regarding the creation, attribu- tion, composition, and functioning of procurement commissions in SOEs and parastatals and Decision 04/CAB/PM/ARM of January 21, 2014, estab- lishing the manual of procurement procedures for SOEs and parastatals (Annex 7). The normative legal and regulatory framework for procurement is strong. An evaluation of Niger’s public procurement system, conducted in 2017 using the OECD’s 2006 Methodology for Assessment of National Pro- curement Systems (MAPS), found that the strength of Niger’s national pro- curement system resides in strong compliance with WAMEU directives. Niger received a score of 2.4 out of 3.0 on base indicators. There is room for improvement in the application of the legal and regulatory framework. The MAPS gave a global score of 1.86 out of 3.0 on performance and conformity indicators. This situation affects the transpar- ency, integrity, economy, openness, fairness, competition, and accountability of public procurement and reflects the following challenges: • The single-source procurement method is used for 32.3 percent of con- tracts and 38.9 percent of the value of public procurement, three times higher than WAMEU norms. • The rate of derogation from publicity periods is 15.4 percent compared to the WAMEU norm of 5.0 percent. • Procurement delays are significant, as reflected by an average delay of 80 days between bid opening and notification during 2013–15, compared to the WAMEU norm of 30 days. For the same period, the delay between bid opening and definitive attribution of a contract was 147 days, com- pared to a maximum of 104 days according to the national regulation. Procurement practices among SOEs face similar challenges as those encountered in the general administration. Interviews conducted during the preparation of this study, together with a review of procurement audits for 2016 and 2017 and of specific SOE and parastatal audits (of the five SOEs considered in this study), found that SOEs and parastatals and the general administration face similar procurement challenges. In addition, SOEs and parastatals face additional obstacles: • Published procurement legislation and regulations are not well known among employees of SOEs and parastatals. • Although Annual Procurement Plans are frequently available and pub- lished, numerous activities are undertaken that are not in the procure- ment plans, planned procurement modalities are not always used, implementation of annual procurement plans varies significantly (from iSOEF Module 4: Corporate Governance and Accountability Mechanisms 53 8 to 100 percent) from entity to entity and from year to year, and there are important differences between planned and actual contracting and con- tract implementation times. • SOEs and parastatals often face delays in the receipt of subsides, which in turn delays procurement processes. • The requirement that contracts be approved by the president of an SOE’s board of directors frequently causes delays. In addition, the board presi- dent’s involvement in procurement activities dilutes the board’s oversight of the SOE, as its president is involved directly in management activities. • The introduction of a procurement information management system has increased procurement delays, as procurement staff have received little training in the use of the system, and the system is not accessible remotely. 54 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger CHAPTER 5 Action Plan for an Improved SOE Sector Based on the findings of the iSOEF, a three-year, sequenced, and selec- tive action plan for improving oversight of SOEs is presented. It focuses on: (i) strengthening the institutional framework for financial oversight; (ii)  improving financial information and the monitoring of fiscal risk; (iii) increasing transparency and improving audits; and (iv) legal reforms to be developed and adopted by the MoF. This tailored action plan, summa- rized below and presented in detail in Annex 10, seeks to improve financial oversight and management of fiscal risk. The DEP/PE could be elevated to the rank of a General Directorate. Transforming the DEP/PE into a new General Directorate of SOEs (DGE/­EP) could help mitigate the current limits and fragmentation of financial oversight. Enhancing the collection of data and ensuring regular and timely publication of annual financial statements are critical. Improving the management and monitoring of SOE performance and associated fiscal risks requires good quality data. To this end, it is critical to ensure regular and timely publication of annual financial statements; the establishment of a 55 database and monitoring dashboard for SOE financial information; and the creation of a system for the collection and transmission of financial reports and statements. Producing an aggregated report on SOEs and strengthening the management and monitoring of fiscal risks are priorities. Preparing an annual aggregated report on SOEs—initially for government use, and later for publication—would provide critical information to improve the oversight of the sector. A methodology for analyzing and following up on fiscal risks needs to be developed and adopted, and it will be important to conduct a census and an assessment of current performance contracts. The legal framework needs to be updated to enhance the perfor- mance of the SOE sector and limit fiscal risk. The updated legal frame- work will formalize the current mechanism for financial oversight (the dual model) and grant an important role to the MoF in creating SOEs and con- ducting SOE financial oversight to ensure better fiscal management and monitoring. Additionally, it will help expand the corporatization of SOEs and define clear criteria for their establishment. 56 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger References Adamou Maiga, Taibou. 2016. Domestic Private Sector Participation in Water and Sanitation: The Niger Case Study. Water and Sanitation Program Report. Washington, D.C.: World Bank. Available at: http://documents.worldbank.org/ curated/en/533161467199079654/Domestic-private-sector-participation-in- water-and-sanitation-The-Niger-Case-Study (accessed May 29, 2019). Bova, Elva, Marta Ruiz-Arranz, Frederik Toscani, and H. Elif Ture. 2016. “The Fiscal Costs of Contingent Liabilities: A New Dataset.” IMF Working Paper No. WP/16/14. Washington, D.C.: IMF. Available at: https://www.imf.org/en/ Publications/WP/Issues/2016/12/31/The-Fiscal-Costs-of-Contingent- Liabilities-A-New-Dataset-43685 (accessed May 30, 2019). Cour des Comptes du Niger. 2014. Rapport Général Public. 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Available at: http://documents.worldbank.org/curated/ en/657831468290490264/Niger-Privatization-and-Regulatory-Reform- Technical-Assistance-Project (accessed May 29, 2019). ———. 2009. “Report on the Observance of Standards and Codes: Accounting and Auditing.” Washington, D.C.: World Bank. ———. 2013. Governance of State-Owned Enterprises and Public Agencies in the Islamic Republic of Mauritania. Washington, D.C.: World Bank. Available at: http://documents.worldbank.org/curated/en/177181467999111852/Governance- of-state-owned-enterprises-and-public-agencies-in-the-Islamic-Republic-of- Mauritania (accessed May 29, 2019). ———. 2014. Corporate Governance of State-Owned Enterprises: A Toolkit. Washington, D.C.: World Bank. Available at: http://documents.worldbank.org/ curated/en/228331468169750340/Corporate-governance-of-state-owned- enterprises-a-toolkit (accessed May 29, 2019). ———. 2018. Country Partnership Framework for the Republic of Niger for the Period of FY18–FY22. Washington, D.C.: World Bank. Available at: http://documents. worldbank.org/curated/en/466811523970978067/Niger-Country-partnership- framework-for-the-period-of-FY18-FY22 (accessed May 29, 2019). ———. Forthcoming. Integrated State-Owned Enterprises Framework (iSOEF). Washington, D.C.: World Bank. World Health Organization (WHO) and United Nations Children’s Fund (UNICEF). 2017. Progress on Drinking Water, Sanitation and Hygiene: 2017 Update and SDG Baselines. Geneva: WHO and UNICEF. Available at: https://www.who.int/ water_sanitation_health/publications/jmp-2017/en/ (accessed May 29, 2019). 58 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger ANNEX 1 Legal Framework for SOEs and Parastatals in Niger 59 TABLE 13: Legal Framework for SOEs and Parastatals in Niger 60 EPA EPIC SE SEM >50% State Capital SEM <50% State Capital Annual General Meetings (AGMs) President N/A N/A Not specified. Unless the law indicates Unless the law indicates otherwise, the AGM’s otherwise, the AGM’s president is the board president is the board chair. chair. Members N/A N/A Designated by Designated by Designated by shareholders, who shareholders, who can shareholders, who can can designate as designate as many designate as many many representatives representatives as they representatives as they as they want. want. want. Function N/A N/A Hears the activity Hears the administrative Hears the administrative report from the report on social affairs and report on social affairs and board; hears the committee reports on the committee reports on report of the external their relevant mandates; their relevant mandates; auditor; approves approves financial and approves financial and financial and account account statements; sets account statements; sets statements; fixes dividends to be distributed dividends to be distributed dividends and benefit by proposition of the by proposition of the distribution board; nominates, board; nominates, modalities; approves replaces, or reelects replaces, or reelects the compensation of administrators other than administrators other than administrators, board those assigned by the those assigned by the chair, and external state or external auditor; state or the external auditor. sets the compensation of auditor; sets the the external auditor. compensation of the external auditor. Meeting N/A N/A Minimum of once a Minimum of once a year. Minimum of once a year. year. Summoned by Summoned by the board. Summoned by the board. the board. Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger EPA EPIC SE SEM >50% State Capital SEM <50% State Capital Board of Directors Chair of the Appointed by decree Appointed by decree Appointed by decree Appointed by decree after Chosen from among the Board after nomination by after nomination by after nomination by nomination by the administrators. The state, the ministry the ministry the ministry ministry responsible for no matter its share of responsible for responsible for responsible for general oversight. capital, can appoint by general oversight. general oversight. general oversight. Compensation set by the decree a board chair when Compensation set Compensation set Compensation set by board. the SEM is of strategic by the board. by the board. the board. interest. Members 3–12 members. 3–12 members. 3–12 members 3–12 members. The 3–12 members. The Constitutes the Constitutes the appointed by the state’s representatives are state’s representatives are supreme deliberative supreme deliberative ministry responsible appointed according to appointed according to instance. Members instance. Members for general oversight. the laws and rules in the laws and rules in are chosen based on are chosen based on Each shareholder place. The other board place. The other directors their specific their specific other than the state directors are elected by of the board are elected Legal Framework for SOEs and Parastatals in Niger competences or to competences or to appoints a director of the AGM according to by the AGM according to represent socio- represent socio- the board. The board their registered shares their registered shares professional professional directors receive after nomination by the after nomination by the categories. The categories. The tokens for their AGM’s private capital representatives of the state’s state’s attendance, with the representatives. The private capital of the representatives representatives amount set by the number of state AGM. The number of cannot be members cannot be members board according to representatives is set by state representatives is of more than of more than the regulation in decree or by the decision set per decree or by the 7 boards. 7 boards. The place and pending authorizing public decision authorizing the Compensation is set compensation is set the approval of the participation. The state’s public participation. The by regulatory by regulatory AGM. number of seats is at least State has a number of process, depending process, depending proportional to its share of seats at least proportional on the importance of on the importance of the capital and in any case to its share of the capital the entity. Appointed the entity. Appointed cannot be lower than 2. and in any case cannot be for 3 years and for 3 years and The representatives of the lower than 2. renewable by the renewable by the state are appointed by ministry responsible ministry responsible legal order of the ministry for general oversight for general oversight responsible for general after nomination by after nomination by oversight after nomination the relevant the relevant by the ministry ministries. ministries. responsible for direct oversight. They are chosen according to their specific competences. 61 (continues on next page) TABLE 13: continued 62 EPA EPIC SE SEM >50% State Capital SEM <50% State Capital Meetings Minimum of 3 times Minimum of 3 times Minimum of 3 times Minimum of 3 times a Minimum of 3 times a per year, as a year, as a year, as summoned year, as summoned by the year, as summoned by the summoned by the summoned by the by the board chair. board chair. board chair. board chair. The board chair. The The ministry ministry responsible ministry responsible responsible for for oversight can for oversight can oversight can also also summon a also summon a summon a board board meeting if a board meeting if a meeting if a failure is failure is observed. failure is observed. observed. General Directors and Management Mechanisms General Appointed by decree Appointed by decree Appointed by decree Statues typically indicate Statues typically indicate Director after nomination by after nomination by after nomination by that the board chair that the board chair the ministry the ministry the ministry decides the general decides the general responsible for direct responsible for direct responsible for direct direction of the direction of the oversight. The oversight. The oversight. Benefits corporation and can ask corporation and can ask general director general director and compensation the board to appoint a the board to appoint a prepares the budget, prepares the budget, are determined by general director. The general director. The which is voted by which is voted by the board in general director can be an general director can be an the board, and the board, and conformity with the administrator or not. administrator or not. prepares quarterly prepares quarterly rules and regulations General directors General directors reports and the reports and the in place. appointed by the state are appointed by the state are annual report, which annual report, which appointed by decree. appointed by decree. are submitted to the are submitted to the Compensation and Compensation and board. board. benefits are set by the benefits are set by the board. board. Procurement The general Contracts are signed Contracts are signed Contracts are approved by Contracts are approved by regulation for by the general by the general the general director if they the general director if they procurement applies. director after director after are below a threshold set are below a threshold set approval by the approval by the board by the board. by the board. board chair. The chair. The general general regulation regulation for for procurement procurement applies applies when the when the entity entity receives receives subsidies subsidies from the from the state and state and for for contracts above a contracts above a threshold set by Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger threshold set by regulation. regulation. EPA EPIC SE SEM >50% State Capital SEM <50% State Capital Financial The general Commercial rules Commercial rules Commercial rules and Commercial rules and management regulation for public and accounting and accounting apply. accounting apply. An accounting apply. An finances applies. An apply. One or An external auditor is external auditor is external auditor is accountant and a multiple external appointed by the appointed by the board. appointed by the board. financial comptroller auditors are chosen board under the are appointed by the from a list accredited conditions intended Ministry of Finance. by the tribunals and by corporate laws. The SAI conducts an appointed by the audit. board under the conditions intended by corporate laws. Employee The board adopts a The board adopts a The board adopts a The board adopts a status The board adopts a status status status for employees status for employees status for employees for employees that for employees that that conforms to the that conforms to the that conforms to the conforms to the decree conforms to the decree decree on the decree on the decree on the on the general status of on the general status of Legal Framework for SOEs and Parastatals in Niger general status of general status of general status of employees of EPICs. employees of public employees of public employees of EPICs. employees of EPICs. entities. entities. 63 ANNEX 2 Fiscal Indicators TABLE 14: Fiscal Indicators   2011 2012 2013 2014 2015 2016 2017 Total revenues and grants 17.9 21.4 24.6 23.0 23.3 20.3 21.2   Tax revenues 13.4 13.9 15.2 15.6 16.0 13.5 13.1   of which tax paid by 5 SOEs 0.18 0.14 0.25 0.24 0.27 0.15 0.19   Nontax revenues 0.7 1.2 1.2 1.9 1.8 0.6 1.0   of which dividends paid by 5 SOEs 0.0 0.0 0.0 0.0 0.058 0.014 0.007  Grants 3.8 6.1 8.0 5.5 5.4 6.0 6.7   Other revenues 0.1 0.2 0.1 0.1 0.2 0.1 0.3 Total expenditures 19.4 22.5 27.2 31.1 32.4 26.3 26.9   Current expenditures 12.6 11.4 13.5 14.6 15.4 14.0 13.7   of which current transfers 3.5 4.2 5.0 5.4 4.8 4.4 4.6    of which those received by 5 SOEs 0.20 0.40 0.28 0.55 0.41 0.31 0.36   Capital expenditures 6.8 11.1 13.7 16.4 16.9 12.3 12.7   Other expenditures –0.3 0.0 0.0 0.0 0.0 0.0 0.5 Central government balance –1.5 –1.1 –2.6 –8.0 –9.0 –6.1 –5.7   Other financing needs (arrears) –3.4 0.2 –0.6 1.4 –0.3 0.4 –1.1 Total financing (external and domestic) 4.9 0.9 3.2 6.6 9.3 5.7 6.8   External financing (net) 3.3 2.1 2.7 3.0 4.3 3.8 3.4   Domestic financing (net) 1.6 –1.2 0.5 3.7 5.0 1.9 3.4 Central government debt 25.9 24.9 24.7 30.6 39.7 43.7 49.3   of which outstanding on-lent and guaranteed loans (SOEs) — — — — — — 6.74 Source: Niger authorities; IMF and World Bank staff estimates, 2018. 65 ANNEX 3 A Simple Framework for the Analysis of Fiscal Risks Fiscal risks are possible deviations from the fiscal outcomes that were expected at the time the budget or other fiscal forecasts were prepared. Formally, fiscal risks are defined as “short-term and medium-term variations of fiscal variables against the values envisaged in the Budget, financial and/­or other reports or projections of public finances” (IMF 2016). In other words, fiscal risks are driven by circumstances that, if realized, would bring signifi- cant revenue shortfalls or expenditure increases, and most likely increase deficits and public debt. Risks can materialize following a variety of shocks that affect SOE performance and may trigger government obligations. Sources of risk include potential shocks to key macroeconomic variables (such as economic growth, commodity prices, interest rates, or exchange rates) that could affect SOE performance (IMF 2016). The economic performance of SOEs has a direct bearing on the government budget and can generate significant fiscal pressures. While healthy companies constitute valuable assets for the state, loss-making or overly indebted companies represent liabilities that may require intervention through capital injection or other forms of assistance. Shocks or poor SOE performance often imply calls on several types of 67 contingent liabilities. Obligations triggered by such uncertain events include both explicit liabilities—those defined by law or contract, such as debt guarantees—and implicit liabilities—moral or expected obligations for the ­ government, based on public expectations or pressures such as bailouts of banks or public sector entities. Though SOEs are as vulnerable to exogenous shocks as private enterprises operating in the same sector, they do not have the same incentives to manage such shocks. Should shocks materialize, some SOEs may not have the same motivation or need to manage and withstand adverse effects because of expected government support or bailout. The same expec- tation may lead SOEs to accumulate excessive debt. In addition, SOEs may provide socially sensitive goods and services, where protracted losses may be covered, as do private enterprises operating in competitive markets. This reduces their incentives to control costs and improve the quality of their out- puts, thus increasing fiscal risk. SOEs may benefit from preferential access to financing that their private counterparts cannot obtain. This preferential access reduces pressures to be efficient and facilitates the accumulation of debt. It can take the form of direct lending by the government at a lower interest rate than can be found on the market, provision of government guarantees for borrowing or securities issued by SOEs, or the tacit expectation by financial market agents that governments will stand behind their SOEs even in the absence of explicit guarantees. This perception of an implicit government guarantee is often reflected in lower financing costs for SOEs and limited differentiation among borrowing terms for different SOEs. The potential fiscal risk emanating from SOEs can therefore be assessed through the impact of risk factors on key channels linking SOE performance and public finance (Figure 13). A first indicator is the SOE’s net contribution to the budget, which measures the SOE’s direct impact on fiscal revenue and spending, such as with indirect taxes, corporate income tax, dividends, subsidies, net equity and debt payments, and calls on government guarantees. A second indicator is the financing need of SOEs. This indicator complements the previous one, as the impact of a risk factor on net contribution can be offset by taking on additional debt. That addi- tional risk also reduces the scope for net contributions in the future, all other things being equal. A third indicator is the net debt, which indicates total liabilities minus current assets of SOEs. Rising net debt increases the gov- ernment’s exposure to adverse shocks to SOEs’ balance sheets and opera- tions (through the government’s need to provide financial support to the SOE and the likelihood of reduced net contributions to the government’s budget in the future). 68 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger FIGURE 13:  Channels through Which SOEs Could Become a Source of Fiscal Risk SOE • Carries out Can result • High debt levels May • Capital injections noncommercial in • Arrears (vis-à-vis require • Bailouts objectives tax authorities, • Cleanups of SOE • Incurs losses suppliers, inter- balance sheets (technical) SOE) • Mispricing Exacerbated by State • Mandates SOE • Allows arrears to • Moral hazard to carry out NCOs accumulate • Reduced fiscal (sometimes • Subsidizes space unremunerated lending to SOE • High borrowing by State) • Guarantees SOE costs debts • Fiscal vulnerability Source: Prepared by author. Monitoring fiscal risk—including data collection, analysis, and pro- jections of multiple alternative scenarios—is important for sustainable fiscal policy. A schematic representation of fiscal risk monitoring (Fig- ure 14) provides a framework under which data are collected from SOEs and used to construct a database, as well as alternative scenarios based on mac- roeconomic, financial, and operational assumptions. The scenarios are then subjected to stress tests—such as a sudden change in the oil price, exchange rate, or domestic and international demand—to assess the impact of those shocks on the financial health of SOEs and respective fiscal indicators such as revenues or debt. Fiscal Sustainability and Risk Analysis—Brief Description of Methodology and Assumptions The analysis presented in Chapter 3 combines use of the World Bank’s fiscal sustainability tool with an analysis of the income and balance sheet statements of five nonfinancial SOEs that represent a significant source of fiscal risk. It follows three broad steps: 1. Constructing a baseline scenario for the five selected SOEs from 2018 to 2035, based on historical data and assumptions on the expected outcome of normal operations absent exogenous shocks. A Simple Framework for the Analysis of Fiscal Risks 69 FIGURE 14:  Consolidated Central Government Debt and Debt of Five SOEs (% of GDP) Data from Baseline Stress tests Fiscal risk SOEs and (e.g., oil assessment (financial alternative price, (for each SOE reports, scenarios exchange and overall business rate) impact on the plan, budget and projections) medium-term potential risks) MoF/MSOE in MoF consultation with SOE MoF (shared with all parties) Key assumptions (macroeconomic; financial; operational) MoF, SOE Source: Verhoeven et al. (2008). Assumptions about general macroeconomic conditions, prices, inter- est and exchange rates, and GDP growth are made. Sectoral and SOE- specific factors, such as changes in regulations governing the sector and investment plans, are calibrated. The analysis uses SOE-level data and information gained in interviews with selected SOE staff and management. It requires detailed operational insight into the determi- nants of SOE revenues, expenditures, and balance sheet items. The income statements under baseline assumptions are calculated sepa- rately for each of the five selected SOEs and then aggregated. Revenue and expenses are projected based on key macroeconomic variables, such as oil and uranium prices and domestic demand. Other assump- tions include the consolidation of expenses and the rigidity of some expenses, such as wages and maintenance expenses. In sum, SOE-level balance sheets are projected based on the historical evolution of assets and information gathered from SOE management on the outlook for investment and other assets policy. The net profit or loss is derived from income statements, and social capital is kept constant over the projection horizon. Liabilities are computed as a residual by subtract- ing equity from total assets. In this regard, the total liabilities or gross debt of the five selected SOEs are assumed to be driven by the net profit or loss and the policy to accumulate assets, including investment 70 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger in fixed assets and other current assets. In this context, SOEs can avoid accumulating debt by cutting capital expenditure, even if the operat- ing balance has deteriorated. This choice has its own costs in terms of limiting the SOE’s growth over the medium term and holding back the achievement of the objective for which it was created. For this reason, this option has not been considered as one of the solutions when the shock hits. A negative shock will either reduce revenue or increase expenses, which will in turn affect the dividends and taxes paid to the central government and increase SOE debts. 2. Forecasting fiscal variables using the fiscal sustainability tool of the Macroeconomics, Trade, and Investment Global Practice. The baseline scenario for Niger’s fiscal accounts is consistent with the Debt Sustainability Analysis (DSA) conducted in November 2018 by IMF and World Bank staff. Projections have been made using the fiscal sus- tainability tool, which can conduct deterministic and stochastic fiscal sustainability assessments. The stochastic simulation looks at the aggregation of fiscal risks in a probabilistic and endogenous analytical framework, generating fan charts and cumulative probability distribu- tions for key variables, such as the debt-to-GDP ratio. Given data con- straints (no long time series available), the analysis in this chapter uses a deterministic assessment methodology. 3. Conducting a stress test analysis to show how macroeconomic risks or shocks may affect SOEs’ aggregate financial conditions and, in turn, those of the central government. Variables typically used to evaluate the financial health and fiscal risks of SOEs include the SOE’s net contribution to the budget (combining taxes and divi- dends paid and subsidies received) and net debt. Under the framework used in this analysis, SOEs affect central government operations according to Figure 15. A Simple Framework for the Analysis of Fiscal Risks 71 FIGURE 15:  Channels through Which SOEs Become the Source of Fiscal Risks SOEs Central Government (income statement and balance sheet) (fiscal sustainability tool) SOEs income statement Operation of the central government Revenues Of which operating transfers Total revenue and grants Expenses Of which taxes and dividends paid by SOEs Of which taxes and dividends Total expenditure Gross profit or loss Of which transfers to SOEs Taxes on profit Net profit or loss Fiscal balance SOE balance sheet Central government debt Assets Fixed assets Consolidated debt (including SOEs debt) Current assets Of which inventory Liabilities and equity Equity Of which profit or loss Of which investment transfers Liabilities 72 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger ANNEX 4 Risk Assessment and Impact of Shocks on SOEs and Fiscal Balances TABLE 15: Risk Assessment and Impact of Shocks on SOEs and Fiscal Balances Impact on SOEs If Impact on Central Source of Risks Likelihood Realized Government If Realized Sharp rise in interest Low Low to medium Low to medium rate due to tightening (in view of potential for Tighter global financial Reduced dividends and of global financial tighter United States conditions could prompt taxes due to low profit or conditions monetary policy and WAEMU countries that loss from increased sustained rise in risk currently have access to expenses; increased costs premiums for emerging international markets to in terms of transfers, and developing rely more on financing in subsidies, or bailout. countries) regional markets. Niger’s SOEs would face higher borrowing costs and reduced availability of funding. (continues on next page) 73 TABLE 15: continued Impact on SOEs If Impact on Central Source of Risks Likelihood Realized Government If Realized Depreciation/ Low to medium Low Low devaluation of CFAF (in view of WAEMU Currently, no SOE has Currently, no SOE has authorities’ commitment debt denominated in debt denominated in to the CFAF’s peg to the foreign currency. foreign currency. euro) Reduced external High High High demand for oil and (in view of the volatility Some important SOEs in Reduced dividends and uranium of oil and uranium prices Niger are operating in the taxes due to low profit or observed in international oil and uranium sectors, loss from increased markets in recent years) and low prices of oil and expenses; increased costs uranium would adversely in terms of transfers, affect their revenues. subsidies, or bailout. Deterioration in Medium High High security situation (given cross-border Important SOEs would be Pressure on public spillovers from security negatively affected by finances from higher tensions in neighboring reduced revenue if they security expenditures; countries) needed to slow down or reduced dividends and stop their operations, and taxes due to low profit or some would see their loss from increased operating expenses expenses. increase. Unfavorable weather High High High conditions/natural (in view of cyclical Unfavorable weather Reduced dividends and disasters. drought and locust conditions would reduce taxes due to low profit or plague occurrences) agricultural output, loss from increased increase food insecurity, expenses; increased costs and cause inflationary in terms of transfers, pressures. This would subsidies, or bailout. affect most SOEs operating in the agriculture sector. Deterioration in SOE High High High governance (in view of current Increased losses and Increased costs in terms corporate management possibly unsustainable of transfers, subsidies, or practices among Niger’s debt dynamics. bailout. SOEs) Reduced domestic High High High demand (in view of the volatility As most of Niger’s SOE Reduced dividends and observed in recent years) revenues depend on taxes due to low profit or domestic demand, any loss from increased negative shock would expenses; increased costs adversely affect SOEs’ in terms of transfers, financial performance. subsidies, or bailout. Source: IMF (2019). 74 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger ANNEX 5 Evolution of the SOE Sector in Niger SOEs experienced strong growth in Niger in the 1970s in response to the development of the uranium industry. SOEs were an important instrument for the government in developing the productive sector, produc- ing goods and services, and creating jobs. In 1985, there were 64 SOEs in Niger, of which one-third were administrative bodies and the remainder were commercial enterprises. Some of the major SOEs that were founded in the 1970s are still in existence,39 others operate under other names and forms, and still others have closed.40 In 1985, SOEs represented 50 percent of jobs in the private and parastatal sectors (employing almost 11,500 people) and 35 percent of value added in the economy. 39. The Nigerien Electricity Company (NIGELEC), Nigerien Petroleum Products Company (SONIDEP), Niger Transit (Nitra), Nigerien Coal Company (SONICHAR), Niger Office of Food Products (OPVN), and Nigerien Rice Company (RINI) are still in operation. 40. These include the National Society of Commerce and Production of Niger (COPRO- Niger), Office of the Post of Niger (OPT, now Niger Poste), Nigerian Society of Peanuts (SONARA), Nigerian Society of Cement Plants (SNC), Air Niger, and the Niger Water Company (SNE)—now known as SPEN and SEEN. SPEN was created under the framework of the privatization of SNE, which resulted in the creation of an operating company called SEEN and a heritage company called SPEN. 75 Niger’s economy was hit by multiple shocks at the beginning of the 1980s, and the low performance of SOEs during this time had serious consequences for the overall economy and for public finances. The drop in the price of uranium in the early 1980s, coupled with repeated droughts, led to a decline in GDP, a strong increase in public debt, and a reduction in exports and revenue. Meanwhile, SOE performance was characterized by erroneous investments, unclear and contradictory objectives, poorly adapted policies, and weaknesses in the institutional and legal framework. Perfor- mance challenges also included inadequate management and poorly defined relations between SOEs and the state, the lack of financial discipline, the absence of sound accounting, the lack of qualified staff, and weak board per- formance. SOEs were operating at losses that were absorbed by state trans- fers and bank loans. As a result, the public resources allocated to the sector increased to around 17 percent of public expenditure in 1981, and the sector’s debt at the time represented 50 percent of Niger’s foreign debt and 30 per- cent of domestic debt. This precarious position aggravated economic imbal- ances and weighed on public finances. When the state was no longer able to finance their deficit, SOEs sought financing from banks. This worsened the situation of two state banks41 that were responsible for two-thirds of the credit to the economy, and their subsequent bankruptcies significantly reduced private sector access to credit. Against this backdrop, the GoN initiated a major program of reforms. Some of the monopolies granted to SOEs and their control of prices were cancelled. A program of privatization, liquidation, and restructuring was implemented. Measures were taken to improve the management of the SOE portfolio, to implement a new legal framework, to reduce subsidies, and to improve SOE performance. Some of the reforms were undertaken with World Bank support. The reform agenda achieved some important results. The Ministry of Public Enterprises (MEP), established in 1984, was responsible for the direct oversight of SOEs, including policy formulation, performance monitoring, financial management, and technical oversight of the 26 SOEs that were in urgent need of disinvestment or rehabilitation. Technical oversight of the 38 other SOEs had been assigned to the government agencies that were associ- ated with each SOE’s activities. The legal framework governing SOEs, their autonomy, and a posteriori controls were adopted in 1986 and the beginning 41. Caisse Nationale de Crédit Agricole (CNCA) was closed in 1988. The Banque de Développement de la République du Niger (BDRN) was closed in 1990. 76 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger of 1987.42 The privatization of 24 SOEs, the liquidation of six, the restructur- ing of five, and the introduction of performance contracts and an informa- tion management tool during this time had a positive impact on SOEs, particularly those that subsequently experienced a significant reduction in losses. Reform progress faded toward the end of the 1980s. The new legal texts were not fully applied, and the continuing lack of financial autonomy among SOEs meant that the state continued to pay their debts. Implementa- tion of these reforms encountered challenges posed by Niger’s economic, social, and political context, as well as complex public finance challenges. For example, the state only partially honored the commitments it had enshrined in performance contracts and did not pay all of its SOEs’ service provision bills. Performance contracts lacked rigor and suffered from a lack of follow-up, even with the creation of a committee assigned to undertake this task. The information system had only partial coverage and therefore did not allow for a full assessment of the impact of SOEs on public finances. Although external support provided by international and local auditing firms helped to improve the preparation of numerous audits and the quality of accounting information, delays in the preparation of SOEs’ financial state- ments persisted. Moreover, audit recommendations were not implemented. Capacity building activities in the form of training had only modest results due to frequent changes in personnel, inadequate human resource manage- ment, and resistance within SOEs to adopt new management methods. As such, SOE performance declined further and arrears and cross-debts increased. The unstable political, social, and economic context remained throughout the 1990s, and SOEs continued to exhibit weak perfor- mance during this time. The introduction of a multiparty democratic sys- tem in 1991 ushered in a new period of instability, owing in particular to many changes in government. Niger witnessed two coups d’état in 1996 and 1999, respectively. In addition, several droughts, low uranium prices, and the devaluation of the currency in 1994 all had a negative impact on the economy and public finances. Even after the reforms of the previous decade, SOEs continued to be plagued by overstaffing, low access to capital, and a lack of effective management—a situation that was worsened by the challenging economic environment. SOE productivity and profitability were low, and some companies were used by overseeing ministries as a source of 42. This included Ordinances 86-001 and 86-002 of January 10, 1986; decrees 86-120, 86-121, 122, and 123 of September 11, 1986; Decree 86-154. Evolution of the SOE Sector in Niger 77 extrabudgetary funds. SOEs consequently accumulated significant arrears, debt, and cross-debt (World Bank 2007). Although privatization of SOEs was at the heart of reforms in the 1990s, it was only partially implemented and subject to delays and yielded mixed results. Reforms aimed to reduce SOE debt and initiate privatization were unsuccessfully launched in the early 1990s. These reforms continued into 1997 with the adoption of a privatization program that aimed to privatize 12 SOEs, liquidate three, and restructure eight.43 The Ministry of Finance, Economic Reforms, and Privatization was responsible for the pro- gram until 1999, when the government replaced it with the Ministry of Privatization and Restructuring of State-Owned Enterprises, which included the Privatization Program Coordination Unit. Although the program should have been finalized before the end of 2000, it encountered significant delays due to the complexity of reforms, low implementation capacity, and internal resistance. By 2003, only six SOEs, including in the telecommunications and water sectors, had been privatized. Reforms to improve the legal and regula- tory framework in sectors, such as telecommunications and electricity, were also implemented. Results were mixed, and SOEs continued to weigh on the economy and public finances without making significant improvements in service provision. The 2000s were marked by fewer SOE-related reforms and a weak- ening in financial oversight. Privatization efforts continued until the Min- istry of Privatization and the Privatization Program Coordination Unit were dismantled in the middle of the decade. During this time, SOEs were moni- tored less systematically and the principle of financial oversight was no lon- ger practiced. The period also witnessed growth in the number of administrative public agencies and an increase in subsidies to SOEs. Starting in 2001, the GoN adopted a more targeted, incremental approach, centering on the reform of SOEs in the telecommunications, electricity, oil, agriculture, transport, and finance sectors. Although support for SOE privatization continued, the overall reform effort focused more on improving SOE management, transparency, and financing. Empha- sis was also placed on promoting a better private sector environment and introducing public-private partnerships, where applicable. 43. The objective of the program was to privatize and introduce the private market in three sectors represented by the three most important SOEs—SONITEL (telecommunications), NIGELEC (electricity), and SNE (water). The program also included the privatization of key commercial enterprises: SONIDEP (distribution of petroleum products); OLANI (dairy products); SNC (cement); SONITEXTIL (textiles); SPEHG (hotels); AFN, which became AFRIN (slaughterhouse); RINI (rice); and OFEDES (wells). 78 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger World Bank Support to SOE Reforms in Niger In a context of low growth following several economic shocks, low rev- enues, increasing debt, and weak SOE performance, the GoN adopted a structural adjustment strategy in the 1980s. This strategy included: (i) the preparation and adoption of legal and statutory texts on SOEs, which are still in force; (ii) the privatization, liquidation, and reorganization of SOEs; (iii) the strengthening of sector management, in particular through greater SOE autonomy and accountability, establishment of accounts and a system of management of information, and the strengthening of technical capacities, especially of the MEP; (iv) the establishment of performance con- tracts, elimination of monopolies and price controls, and reduction of subsi- dies; and (v) the reform of certain SOEs, including in the agriculture and the banking sectors. The World Bank supported SOE reforms in the 1980s through three projects—a Structural Adjustment Credit, a Public Enterprise Sector Adjustment Credit Project, and a Public Enterprise Institutional Development Project—for a total of US$140 million. The performance of this reform program was considered to be par- tial, and important lessons can be drawn from the experience. While each program had some success, overall implementation of the strategy was unsatisfactory owing to several key challenges, including: (i) the national conference’s refusal to support the reforms; (ii) the pressure applied by trade unions in opposition to the reforms; and (iii) weak political will to fully imple- ment the reforms. Private investors showed little interest at the time in taking over SOEs, and the difficult economic context weighed on reform implemen- tation. The main lessons learned included that: (i) it is necessary for reforms to be prepared well, with strong government commitment to their imple- mentation, and accompanied by continuous dialog with counterparts; (ii) the incentives for undertaking reform and the economic, social, and policy con- text must be considered in the formulation and sequencing of reforms and in the definition of reasonable reform objectives in light of potential resistance to reform; and (iii) technical assistance for reform preparation needs to be adapted to the country context, and implementation needs to be accompa- nied by a system of information management and follow-up. The GoN continued to undertake SOE reforms in the 1990s, empha- sizing privatization. The World Bank supported SOE reforms through four operations between 1993 and 2001, with total financing of US$117 million. In addition, a Privatization and Regulatory Reform Technical Assistance Project in the amount of US$18.6 million was implemented between 1998 and 2006. Evolution of the SOE Sector in Niger 79 The results of these operations were mixed due to slow progress in imple- menting SOE reforms, despite some progress in improving the regulatory framework and service provision. Key lessons learned from the implementa- tion of these operations include that: (i) it is necessary to ensure that all key stakeholders are committed to the reforms; (ii) the reform implementation calendar must be reasonable given the country context; and (iii) it is neces- sary for the broader reform effort to assess all potential options for achieving SOEs’ management objectives, not only privatization. SOE Reforms in the Water Sector in Niger In 1998, the GoN initiated a broad wave of reforms that included bring- ing the private sector into the distribution of water and sanitation facil- ities in urban areas. These reforms led to the creation of two key entities: the Niger Water Corporation (SPEN) and the Water Management Company (SEEN). These entities were responsible for the management of the state’s water assets and operation of infrastructure, and for the marketing of water services, respectively. Even with the initial success of these reforms, Niger continued to face many challenges in achieving its national objectives for the sector. In 2011, it was estimated that only about 56 percent of the population (9.2 million people) had access to potable water and only 19 percent to sani- tary facilities. Based on earlier reform successes, the GoN decided to transfer the small-town systems to SPEN under a public-private partnership. The World Bank supported this approach with a five-year program of technical assistance to help all sector stakeholders work in synergy to boost private sector participation. Stakeholder coordination was facilitated by bimonthly sector dialogs and annual sector review meetings. The technical assistance also supported the development and implementation of the Water Public Services Guide and the development of institutional capacity among key sector actors. This reform sequence led to improved performance of urban water services. Between 2001 and 2015, access to water increased from 64.6 percent to 91.2 percent, the efficiency of the network increased from 78  percent to 84 percent, and the recovery rate for water bills increased from 78 percent to 90 percent. 80 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger Reforming the Electricity Sector and Improving the Performance of the Nigerien Electricity Company Limited production of electricity in Niger has, even in a context of low prices, kept access rates low, at only 10 percent, with large differences in access between urban areas (50 percent in Niamey) and rural areas (less than 1 percent). Electricity demand has risen by 8.5 percent per year over the last decade, boosted by the low rate of four cents per kilowatt hour (kWh) established in 1977. This low price makes investments in new power production challenging, as alternative production technologies have a much higher cost. Diesel and coal generation, for example, cost 30 and 12 cents per kWh, respectively. To increase electricity supply, the GoN has taken decisive action under the Public Investment Reform Support Credit, a series of World Bank development policy financing operations. It approved an Electric- ity Code and established an energy sector regulatory agency to: (i) promote private participation in energy generation; (ii) develop a tariff-setting meth- odology that ensures the economic and financial sustainability of the sector while paying due attention to the poorest customers and ensuring that the targeting mechanism for the subsidy system is progressive; and (iii) improve the efficiency of NIGELEC’s operations. The new tariff methodology was approved in October 2017 with an overall increase of 20 percent. It includes a pro-poor social tranche and a multiannual electricity tariff adjustment cov- ering 2018–20 and 2021–22 and will enable the utility to be a viable off-taker, thereby improving the likelihood of attracting private investors in the form of independent power producers. Under the same series of operations, the GoN started addressing NIGELEC’s financial situation. To increase its financial capacity to man- age its operations and meet its short-term financing requirements, the GoN has implemented NIGELEC’s financing plan to stabilize its debt-to-equity structure by increasing its share in the capital of the electricity utility. Hence, the GoN retroceded CFAF 60 billion, representing its share in the financing of the Gorou Banda thermal power plant into participation in the capital of NIGELEC. As a result, the ratio of equity to permanent capital was brought below 50 percent. The World Bank is supporting, through technical assistance, studies on the development of grid-connected solar energy, with the final goal of supporting the introduction of private investors partnering with the International Finance Corporation. This effort to support a shift toward a Evolution of the SOE Sector in Niger 81 cleaner and cheaper electricity generation mix will complement existing World Bank engagements in the development of hydroelectricity potential at the Kandadji site and in the new West African Power Pool interconnection that will allow the country to import additional inexpensive hydro-based power. This will allow the country to reach around 20 percent of the genera- tion mix through domestic renewable energy resources by 2030. Under the Fostering Rural Growth Reform series of development policy financing operations, the GoN implemented the first electricity tariff adjustment. The revised tariff reflects the actual cost of generation, transmission, and distribution of electricity following the adoption of the cost coverage tariff methodology and the publication of a multiyear imple- mentation plan. This, together with previous actions undertaken by the GoN, will strengthen NIGELEC’s financial sustainability and provide the basis for investing in grid expansion and rural electrification efforts. The GoN has also established a concession contract with NIGELEC. The reform will help to improve the company’s performance by establishing an account- ing division between generation, transmission, and distribution activities. This will help to identify areas of improvement in each subsegment, which will be spelled out in the performance contract. By the end of the program, it is expected that NIGELEC’s earnings before interest, tax, depreciation, and amortization will increase from CFAF 1.586 billion in 2016 to CFAF 5 billion in 2019. Reform of the Telecommunications Sector—Niger Telecom and Niger Poste Reforms undertaken in the early 1990s refocused the role of the state on defining policies and sectoral regulations and entrusted the man- agement and development of certain activities in the tradable sectors to private operators. Considering the profound changes—technological, economic, and regulatory—experienced in the telecommunications sector in recent years, Niger, like other countries, has since 1996 committed to restruc- turing, liberalization, and privatization reforms in the sector. The subse- quent restructuring of the telecommunications sector resulted in a double separation—of postal and telecommunications services, and of the regula- tory function from the operating function. A Multisector Regulatory Author- ity was created by Order No. 99-044 of October 26, 1999, and the Regulatory Authority for Telecommunications and Post was created by Law No. 2012-70 of December 31, 2012. Regarding the institutional separation, the National 82 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger Post and Savings Office (ONPE) changed status, becoming an SEM and renamed Niger Poste. Law 2005-21 of June 28, 2005, authorizing the trans- formation of the ONPE into a SEM, has given the organization greater man- agement autonomy and opened its equity to the private sector. To date only the staff of Niger Poste has subscribed to the capital previously held 100 per- cent by the state. SONITEL, the result of a merger between the telecommu- nications branch of the former Niger Post Office and the Society of International Telecommunications, was required to strive for the social objective of ensuring all public telecommunications services. The liberalization of the telecommunications sector encountered some delays and reversals. By December 31, 2016, Niger’s telecommunica- tions market had five operators with licenses for the establishment and operation of networks and telecommunications services and one tele- communications infrastructure operator. The postal sector included seven operators, including the original operator (Niger Poste), two national express operators, and four international express operators. The privatization of SONITEL encountered several delays. The company’s majority shares were sold, with GoN maintaining a 34 percent share. Following the introduction of competition in mobile phones, SONITEL was widely criticized for its poor performance and faced several worker strikes, an accumulation of CFAF 40 billion in debt, and a 140 percent increase in users’ costs. After sev- eral years, the expected objectives of SONITEL’s privatization had not mate- rialized. In February 2009, the GoN announced the cancellation of SONITEL’s privatization. Finally, Niger Telecom, an SOE, was created in September 2016 by the merger of two other SOEs: SONITEL (voice and Internet by fixed telephony) and SahelCom (voice and Internet by mobile telephony). Evolution of the SOE Sector in Niger 83 ANNEX 6 Data on SOEs and Public Agencies in Niger TABLE 16: List of SOEs and Public Agencies in Niger Legal Technical Oversight N° Full Name Abbreviation Status Ministry 1 Société de Patrimoine des Eaux du Niger SPEN SE MH/A 2 Société du Patrimoine des Mines du Niger SOPAMIN SE MM 3 Société Nigérienne de Télécommunications NIGER SE MP/T/EN TELECOMS 4 Société Nigérienne des Postes NIGER POSTE SE MP/T/EN 5 Société Nigérienne des Produits Pétroliers SONIDEP SE MC/PSP 6 Banque Agricole du Niger BAGRI SEM MF 7 Banque Commerciale du Niger BCN SEM MF 8 Banque Internationale pour l’Afrique au Niger BIA NIGER SEM MF 9 Banque Islamique du Niger BIN SEM MF 10 Bénin-Niger-Rail BENIRAIL SEM MT 11 China National Petrolium Corporation CNPC/NP SEM MPe (continues on next page) 85 TABLE 16: continued Legal Technical Oversight N° Full Name Abbreviation Status Ministry 12 Compagnie Minière d’Akokan COMINAK SEM MM 13 Compagnie Minière et Energétique du Niger CMEN SEM ME 14 Imouraren IMSA SEM MM 15 Laboratoire National des Travaux Publics et du LNTP/B SEM MEq Bâtiment 16 Société « le Riz du Niger » RINI SEM MC/PSP 17 Société « Niger Transit » NITRA SEM MC/PSP 18 Société d’Exploitation des Eaux du Niger SEEN SEM MH/A 19 Société de Cimenterie Nigéro-Chinoise SOCINIC SEM MM 20 Société de Construction et de Gestion des SOCOGEM SEM MC/PSP Marchés 21 Société de Gestion du Marché de Maradi SOGEMMI SEM MC/PSP 22 Société de Commercialisation des Produits SOCOPAP SEM MC/PSP Agro-Pastoraux 23 Société de Location du Matériel des Travaux SLMTP SEM MEq Publics 24 Société de Raffinage de Zinder SORAZ SEM MPe 25 Société des Mines d’Azelik SOMINA SEM MM 26 Société des Mines de l’Aïr SOMAÏR SEM MM 27 Société des Mines du Liptako SML SEM MM 28 Société Nationale des Transports Nigériens SNTN SEM MT 29 Société Nigérienne d’Assurance et de SNARLEYMA SEM MF Réassurance Leyma 30 Société Nigérienne d’Electricité NIGELEC SEM ME 31 Société Nigérienne de Banque SONIBANK SEM MF 32 Société Nigérienne de Charbon d’Anou Araren SONICHAR SEM ME 33 Société Nigérienne d’Urbanisme et de SONUCI SEM MD/H Construction Immobilière 34 Société de Transports Urbains du Niger SOTRUNI SEM MT 35 Société Nigérienne de Transports Aériens NIGER SEM MT AIRWAYS 36 Société Propriétaire et Exploitante de l’Hôtel SPEHG SEM MT/A Gawèye 37 Agence du Barrage de Kandadji ABK EPIC PRESIDENCE 38 Abattoir Frigorifique de Niamey AFRIN EPIC MA/E 39 Agence Nationale de l’Aviation Civile ANAC EPIC MT 86 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger Legal Technical Oversight N° Full Name Abbreviation Status Ministry 40 Agence Nigérienne de presse ANP EPIC MC 41 Centrale d’Approvisionnement en Intrants et CAIMA EPIC MA/E Matériels Agricoles 42 Conseil Nigérien des Utilisateurs des Transports CNUT EPIC MT Publics 43 Loterie Nationale du Niger LONANI EPIC MF 44 Office de Radiodiffusion et Télévision du Niger ORTN EPIC MC 45 Office des Produits Vivriers du Niger OPVN EPIC MC/PSP 46 Office National d’Edition et de Presse ONEP EPIC MC 47 Office National des Aménagements Hydro ONAHA EPIC MA/E Agricoles 48 Office National des Produits Pharmaceutiques ONPPC EPIC MSP et Chimiques du Niger 49 Palais des Congrès PC EPIC MRC/A/MS 50 Port Sec de Dosso PSD EPIC MT 51 Société de Gestion de la Gare Routière ECOGAR EPIC MI/SP/D/ACR 52 Société Nigérienne des Industries SONIPHAR EPIC MSP Pharmaceutiques 53 Stade Général SeyniKountché SGSK EPIC MJ/S 54 Activités Aéronautiques Nationales du Niger AANN EPA MT 55 Agence Centrale de Gestion des Saisies, des ACGSCGRA EPA MJ Confiscations, des Gels et des Recouvrements d’Avoirs 56 Agence Judiciaire de l’Etat AJE EPA MF 57 Agence Nationale d’Assistance Juridique et ANAJJ EPA MJ Judiciaire 58 Agence Nationale de Diffusion AND EPA MC 59 Agence Nationale de Financement des ANFICT EPA MI/SP/D/ACR Collectivités Territoriales 60 Agence Nationale de Lutte contre la Traite des ANLTP EPA MJ Personnes 61 Agence Nationale de Promotion de l’Innovation AN2PI EPA MI et de la Propriété Intellectuelle 62 Agence de Vérification et de Conformité aux AVCN EPA MI Normes 63 Agence Nationale des Energies Renouvelables ANERME EPA ME et de la Maîtrise d’Energie (continues on next page) Data on SOEs and Public Agencies in Niger 87 TABLE 16: continued Legal Technical Oversight N° Full Name Abbreviation Status Ministry 64 Agence Nationale de la Grande Muraille Verte ANGMV EPA ME/DD 65 Agence Nationale pour la Promotion de l’Emploi ANPE EPA ME/T/PS 66 Agence Nationale pour la Société de ANSI EPA PRESIDENCE l’Information 67 Agence Nigérienne d’Allocations et des Bourses ANAB EPA MES/R/I 68 Agence Nigérienne de la Promotion de ANPER EPA ME l’Electrification Rurale 69 Agence Nigérienne de la Sécurité Routière ANISER EPA MT 70 Bibliothèque Nationale BN EPA MRC/A /MS 71 Bureau de Restructuration et de Mise à Niveau BRMN EPA MI des Industries 72 Centre Culturel Oumarou Ganda CCOG EPA MRC/A/MS 73 Centre de Formation aux Techniques des CFTTR EPA MT Transports Routiers 74 Centre de Multiplication de Bétail CMB EPA MA/E 75 Centre de Perfectionnement des Travaux CPTP EPA MEq Publics 76 Centre de Recherches Géologiques et Minières CRGM EPA MM 77 Centre des Œuvres Universitaires de Niamey CNOU EPA MES/R/I 78 Centre des œuvres universitaires EMIG COU/EMIG EPA MES/R/I 79 Centre Régional des Œuvres Universitaires CROU/AZ EPA MES/R/I d’Agadez 80 Centre Régional des Œuvres Universitaires de CROU/DI EPA MES/R/I Diffa 81 Centre Régional des Œuvres Universitaires CROU/DO EPA MES/R/I deDosso 82 Centre Régional des Œuvres Universitaires de CROU/MI EPA MES/R/I Maradi 83 Centre Régional des Œuvres Universitaires de CROU/TA EPA MES/R/I Tahoua 84 Centre Régional des Œuvres Universitaires de CROU/TI EPA MES/R/I Tillabéry 85 Centre Régional des Œuvres Universitaires de CROU/ZR EPA MES/R/I Zinder 86 Centre National d’Energie Solaire CNES EPA ME 87 Centre National de Lutte Antiacridienne CNLA EPA MA/E 88 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger Legal Technical Oversight N° Full Name Abbreviation Status Ministry 88 Centre National de Lutte contre le Cancer CNLC EPA MSP 89 Centre National de Radioprotection CNRP EPA MSP 90 Centre National de Santé de la Reproduction CNSR EPA MSP 91 Centre National de Transfusion Sanguine CNTS EPA MSP 92 Délégation Générale au Service National de DGSNP EPA MEP/T Participation 93 Ecole de Formation Judiciaire du Niger EFJN EPA MJ 94 Ecole des Mines de l’Aïr EMAIR EPA MM 95 Ecole Nationale d’Administration et de la ENAM EPA PRIMATURE Magistrature 96 Ecole Nationale de Santé Publique DamouréZika ENSP NIAMEY EPA MSP de Niamey 97 Ecole Nationale de Santé Publique de Zinder ENSP ZINDER EPA MSP 98 Ecole Normale d’Instituteurs d’Agadez ENI AGADEZ EPA MEP/A/PLN/EC 99 Ecole Normale d’Instituteurs de Diffa ENI DIFFA EPA MEP/A/PLN/EC 100 Ecole Normale d’Instituteurs de Dosso ENI DOSSO EPA MEP/A/PLN/EC 101 Ecole Normale d’Instituteurs de Maradi ENI MARADI EPA MEP/A/PLN/EC 102 Ecole Normale d’Instituteurs de Tahoua ENI TAHOUA EPA MEP/A/PLN/EC 103 Ecole Normale d’Instituteurs de Tillabéri ENITILLABERI EPA MEP/A/PLN/EC 104 Ecole Normale d’Instituteurs de Zinder ENI ZINDER EPA MEP/A/PLN/EC 105 Ecole Normale d’Instituteurs SaadouGaladima ENI NIAMEY EPA MEP/A/PLN/EC de Niamey 106 Hôpital Général de Référence HGR EPA MSP 107 Hôpital National de Niamey HNN EPA MSP 108 Hôpital National de Zinder HNZ EPA MSP 109 Hôpital National Lamordé HNL EPA MSP 110 Institut de Santé Publique ISP EPA MSP 111 Institut de Formation en Alphabétisation et IFAENF EPA MEP/A/PLN/EC Education Non Formelle 112 Institut de Formation en Techniques de IFTIC EPA MC l’Information et de la Communication 113 Institut Géographique National du Niger IGNN EPA MD/H 114 Institut National de Documentation, de INDRAP EPA MEP/A/PLN/EC Recherche et d’Animation Pédagogique 115 Institut National de la Jeunesse, des Sports et INJS/C EPA MJ/S de la Culture (continues on next page) Data on SOEs and Public Agencies in Niger 89 TABLE 16: continued Legal Technical Oversight N° Full Name Abbreviation Status Ministry 116 Institut Pratique de Développement Rural IPDR EPA MA/E 117 Institut Africain d’informatique IAI EPA MC 118 Laboratoire Central d’Elevage LABOCEL EPA MA/E 119 Laboratoire National de Santé Publique et LANSPEX EPA MSP d’Expertise 120 Maternité Issaka Gazoby MIG EPA MSP 121 Office National des Equivalences et Concours ONECS EPA MES/R/I du Supérieur 122 Office National des Anciens Combattants et ONACVG EPA MD Victimes de Guerre 123 Agence de Promotion des Entreprises et APEIC EPP MRC/A/MS Industries Culturelles 124 Agence du Salon International de l’Artisanat SAFEM EPP MT/A pour la Femme 125 Bureau National de la Carte Brune BNCB EPP MF 126 Bureau National du Droit d’Auteur BNDA EPP MRC/A/MS 127 Centre National de la Cinématographie du Niger CNCN EPP MRC/A/MS 128 Centre Nigérien de Promotion Touristique CNPT EPP MT/A 129 Chambre de Commerce et d’Industrie du Niger CCIN EPP MC/PSP 130 Chambre des métiers d’Artisanat du Niger CMANI EPP MT/A 131 Maison de l’Entreprise ME EPP MC/PSP 132 Centre de Recherches Médicales et Sanitaires CERMES EPSCT MSP 133 Institut National de la Recherche Agronomique INRAN EPSCT MA/E du Niger 134 Centre National de Référence de la CNRD EPSCT MSP Drépanocytose 135 Ecole des Mines et de la Géologie EMIG EPSCT MES/R/I 136 Ecole Supérieure de télécommunications EST EPSCT MP/T/EN 137 Musée National Boubou Hama MNBH EPSCT MRC/A/MS 138 Université Abdou MoumouniDioffo de Niamey UAMD EPSCT MES/R/I 139 Université Dan Dicko Dan Koulodo de Maradi UDDM EPSCT MES/R/I 140 Université d’Agadez UAZ EPSCT MES/R/I 141 Université de Diffa UDI EPSCT MES/R/I 142 Université de Dosso UDO EPSCT MES/R/I 143 Université de Say USA EPSCT MES/R/I 90 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger Legal Technical Oversight N° Full Name Abbreviation Status Ministry 144 Université de Tahoua UTA EPSCT MES/R/I 145 Université de Tillabery UTI EPSCT MES/R/I 146 Université de Zinder UZR EPSCT MES/R/I 147 Agence Nigérienne de la Mutualité Sociale ANMS EPS ME/T/PS 148 Agence Nigérienne de Volontariat pour le ANVD EPS MDC/AT Développement 149 Caisse Autonome des Retraites du Niger CARENI EPS MFP/RA 150 Caisse Nationale de Sécurité Sociale CNSS EPS ME/T/PS 151 Centre des Métiers du Cuir et d’Art du Niger CMCAN EPS MEP/T 152 Fonds d’Appui à la Formation Professionnelle et FAFPA EPS MEP/T à l’Apprentissage 153 Institut National de la Statistique INS EPS MP 154 Observatoire National de l’Emploi et de la ONEF EPS ME/T/PS Formation Professionnelle 155 Caisse Autonome de Financement de l’Entretien CAFER EPF MEq Routier 156 Caisse de Dépôts et de Consignation CDC EPF MF 157 Académie des Arts Martiaux ACAM Sans MJ/S Statut 158 Centre Culturel Franco-Nigérien Jean Rouch CCFN/JEAN Sans MRC/A/MS ROUCH Statut 159 Centre de Formation et de Promotion Musical CFPM/TAYA Sans MRC/A/MS Taya Statut 160 Centre de Lecture et d’Animation Culturelle et CLAC/CNRBLP Sans MRC/A/MS Centre National des Réseaux de Bibliothèques Statut et de Lecture Publique 161 Régie Administrative Chargée de la Gestion de RAE/NIGER Régie MT l’Assistance en Escale 162 Nouvelle Cimenterie de Kao NCK SCP MM 163 Société Nigérienne de Carbonisation du Charbon SNCC SCP MM minéral 164 Compagnie Nationale de Transport des Produits CNTPS SCP MT Stratégiques Data on SOEs and Public Agencies in Niger 91 Abbreviations MA/E: Ministère de l’Agriculture et de l’Elevage Ministry of Agriculture and Livestock MC/PSP: Ministère du Commerce et de la Ministry of Trade and Private Sector Development Promotion du Secteur Privé MC: Ministère de la Communication Ministry of Communication MD: Ministère de la Défense Ministry of Defense MDC/AT: Ministère du Développement Ministry of Local Development and Land Planning Communautaire et de l'Aménagement du Territoire ME/DD: Ministère de l'Environnement et du Ministry of Environment and Sustainable Développement Durable Development ME/T/PS: Ministère de l'Emploi, du Travail et de la Ministry of Employment, Work and Social Protection Sociale Protection ME: Ministère de l'Energie Ministry of Energy MEP/A/PLN/EC: Ministère de l'Enseignement Ministry of Primary Education, Alphabetization, Primaire, de l'Alphabétisation, de la Promotion des Promotion of National Languages and Civic Langues Nationales et de l'Education Civique Education MEP/T: Ministère de l'Enseignement Professionnel Ministry of Professional and Technical Education et Technique MEq: Ministère de l'Equipement Ministry of Equipment MES/R/I: Ministère de l'Enseignement Supérieur, Ministry of Higher Education, Research and de la Recherche et de l'Innovation Innovation MH/A: Ministère de l'Hydraulique et de Ministry in Charge of Water and Sanitation l'Assainissement MI/SP/D/ACR: Ministère de l'Intérieur, de la Ministry of Interior, Decentralization, Customary Décentralisation et des Affaires Coutumières et and Religious Affairs Religieuses MJ/S: Ministère de la Jeunesse et du Sport Ministry of Youth and Sports MJ: Ministère de la Justice Ministry of Justice MM: Ministère des Mines Ministry of Mining 93 MP/T/EN: Ministère des Postes, des Ministry of Postal Services, Telecommunication Télécommunications et de l'Economie Numérique and Numeric Economy MP: Ministère du Plan Ministry of Planning MPe: Ministère du Pétrole Ministry of Petroleum MRC/A/MS: Ministère de la Renaissance Ministry of Cultural Renaissance, Arts and Social Culturelle, des Arts et de la Modernisation Sociale Modernization MSP: Ministère de la Santé Publique Ministry of Public Health MT/A: Ministère du tourisme et de l'Artisanat Ministry of Tourism and Crafts MT: Ministère des Transports Ministry of Transports MFP/RA: Ministère de la Fonction Publique et de Ministry of Civil Service and Administrative Reform la Réforme Administrative EPA: Etablissement Public Administratif Public Administrative Entity EPF: Etablissement Public de Financement Public Financing Entity EPIC: Etablissement Public Industriel et Public Industrial Commercial Entity Commercial EPP: Etablissement Public Professionnel Public Professional Entity EPS: Etablissement Public à caractère Social Public Social Entity EPSCT: Etablissement Public Scientifique, Culturel Public scientific, Cultural and Technical Entity et Technique SCP: Société à Capital Public Public Capital Company SE: Société d’Etat State-Owned Company SEM: Société d’Economie Mixte Company of Mixed Economy 94 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger TABLE 17: Key SOEs (CFAF millions) Total Technical Total Equity Total Oversight Wage Net General and General Total Name Abbreviation Type Ministry Year Revenues Bill Result Taxes Assets Resources Passive Costs Socitété SEEN SEM Ministere de I 2013 23,760.0 3,897.0 1,182.0 199.0 24,960.0 5,211.0 24,960.0 21,466.0 d’Exploitation des Hydraulique et de Eaux du Niger l’Assainissement         2014 22,033.0 3,854.0 1,115.0 177.4 21,230.0 5,877.0 21,230.0 20,820.0         2015 25,453.0 4,519.0 242.0         24,176.0         2016                         2017                 Data on SOEs and Public Agencies in Niger Centrale d CAIMA EPIC Ministere de 2013 6,069.4 620.0 –7,069.0 125.9 14,130.0 –1,769.0 14,960.0 22,160.0 Approvisionnement l’Agriculture et de en Intrants et l’Elevage Matériels Agricoles         2014 5,113.0 641.5 –1,114.0 557.5 14,130.0 –3,728.0 21,390.0 28,253.1         2015 11,720.0 713.2 –1,130.0 773.3 19,850.0 –3,229.0 19,850.0 17,542.1         2016 6,492.7 673.7 –2,964.9 226.5 18,288.7 –4,617.0 18,288.7 13,090.9 Société du Patrimoine SPEN SE Ministere de I 2013 4,568.0 368.0 –886.0         4,224.0 des Eaux du Niger Hydraulique et de l’Assainissement         2014 5,451.0 369.0 –653.0         3,535.0         2015 4,861.0 371.0             Caisse Autonome de CAFER EPF Ministere de 2013 49.8 878.0 –446.4 8,794.0 238.6 –3,412.0 238.7 10,010.0 Financement et de l’Equipement l’Entretien Routier         2014 56.0 970.7 –2,053.0 11,030.0 620.5 –5,612.0 620.5 12,550.0         2015 44.2 994.7 –4,526.0 13,730.0 442.5 –10,260.0 442.8 15,270.0         2016                         2017                 (continues on next page) 95 TABLE 17: continued 96 Total Technical Total Equity Total Oversight Wage Net General and General Total Name Abbreviation Type Ministry Year Revenues Bill Result Taxes Assets Resources Passive Costs Société Nigrienne NIGELEC SEM Ministere de 2013 60,000.0 8,000.0 –31,000.0 769,000.0 30,000.0 58,000.0 131,000.0 61,000.0 d’Electricité l’Energie         2014 70,000.0 9,000.0 –34,000.0 791,000.0 57,000.0 62,000.0 157,000.0 67,000.0         2015                         2016                         2017                 Office National des ONPPC EPIC Ministere de la 2013 4,398.0 727.1 1,239.0 21.2 4,228.9 –186.3 4,228.9 4,105.0 Produits Sante Publique Pharmaceutiques et chimiques du Niger         2014 3,929.7 631.0 –637.6 44.8 5,103.6 8.4 5,103.6 6,184.9         2015 4,285.0 832.8 594.5 34.3 6,017.8 598.4 6,017.8 5,614.6         2016                         2017                 Société Nigérienne SONUCI SEM Ministere des 2013 1,913.0 46.3   17.7 18,160.0 2,027.0 18,170.0 694.7 d’Urbanisme et de Domaines el de Construction l’Habitat Immobilière         2014 4,533.0 297.2 3,896.0 16.6 28,610.0 6,256.0 28,610.0 637.9         2015                         2016                         2017                 Loterie Nationale du LONANI EPIC Ministere des 2013 14,308.9 1,388.0 442.6 2,224.0 5,262.9 1,202.9 5,262.9 13,930.3 Niger Finances         2014 15,807.1 1,182.0 918.1 2,461.0 6,373.5 2,121.0 6,373.5 15,653.7         2015 17,550.0 1,163.0 1,019.0 2,752.0 5,468.9 2,667.3 5,468.9 16,416.6         2016 16,787.8 955.4 2,273.2 2,441.9                 2017               Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger Total Technical Total Equity Total Oversight Wage Net General and General Total Name Abbreviation Type Ministry Year Revenues Bill Result Taxes Assets Resources Passive Costs Imouraren SA IMSA SEM Ministere des Mines 2013   15,480.0 –306.6 236.8 514,700.0 33,610.0 514,700.0           2014   25,580.0 –25,310.0 2,298.0 620,000.0 8,299.0 620,000.0           2015   6,603.0 –167,200.0 509.6 504,700.0 –158,900.0 504,700.0           2016                         2017                 Société du Patrimoine SOPAMIN SE Ministere des Mines 2013 57,082.0 552.1 1,976.8 299.0 36,742.6 15,092.2 36,742.6 55,552.9 des Mines du Niger         2014 33,090.4 682.4 1,531.7 846.2 26,846.3 16,623.9 26,846.3 32,072.5 Data on SOEs and Public Agencies in Niger         2015 69,839.3 793.8 1,163.0 319.0 52,767.1 17,787.0 52,620.7 65,569.0         2016 23,126.3 871.2 –9,501.8 322.2 21,846.6 6,285.2 21,846.6 34,347.8         2017 22,303.1 841.9 3,047.2 285.8 23,874.4 9,332.4 23,874.4 20,050.9 Office des Produits OPVN EPIC Ministere du 2013 3,955.0 866.5 –4,353.0 58.9 25,120.0 –4,299.0 25,120.0 9,639.0 Vivriers du Niger Commerce et de la Promotion du Secteur Prive         2014 13,870.0 988.2 –3,661.0 67.6 30,206.2 –8,039.8 30,206.2 30,353.5         2015 9,885.0 975.8 –3,885.0 191.0 26,878.0 –11,948.6 26,923.0 25,210.0         2016 10,574.0 1,203.5 –1,214.1 81.2 18,296.2 –12,107.6 18,296.2           2017 12,180.5 976.5 –8,610.5 1,466.7 19,981.6 –19,458.5 19,981.6   Société Nigerienne SONIDEP SE Ministere du 2013 415,200.0 2,409.0 10,830.0 582.4 184,600.0 26,910.0 184,600.0 404,700.0 des Produits Commerce et de la Petroliers Promotion du Secteur Prive         2014 386,900.0 2,854.0 6,177.0 1,340.0 151,900.0 26,320.0 151,800.0 381,400.0         2015 342,400.0 3,291.0 2,091.0 1,403.0   24,370.0 168,000.0 340,000.0         2016 225,220.8 2,219.0 2,981.2 662.9 187,527.2 25,754.6 187,527.2           2017 358,359.3 3,404.4 8,089.6 1,479.6         (continues on next page) 97 TABLE 17: continued 98 Total Technical Total Equity Total Oversight Wage Net General and General Total Name Abbreviation Type Ministry Year Revenues Bill Result Taxes Assets Resources Passive Costs China National CNPC-NP SEM Ministere du Petrole 2013 216,300.0 3,481.0   27,370.0 1,182,000.0 11.4 1,182,000.0   Petrolium Corporation Niger Petrolium         2014 236,600.0 5,767.0   333,700.0 2,148,000.0 13.0 2,148,000.0           2015                         2016                         2017                 Société Nigérienne de Niger SE Ministère des 2013                 Télécommunications Telecom Postes, des Télécommunications et de l’Economie Numérique         2014                         2015                         2016 38,085.6                       2017                 Office de Radio ORTN EPIC Ministere de la 2013                 Diffusion et Télévision Communication du Niger         2014                         2015 1,034.0     255.7                 2016                         2017                 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger Total Technical Total Equity Total Oversight Wage Net General and General Total Name Abbreviation Type Ministry Year Revenues Bill Result Taxes Assets Resources Passive Costs Société Nigérienne NIGER SE Ministere des 2013     250.7   18.5 2,238.2 18.5   des Postes POSTE Postes des Telecommunications et l’Economie Numerique         2014 1,740.2 1,371.8 –259.4 105.0 19.0 1,962.2 19.0 194.6         2015 1,352.4 1,556.0 –395.4 91.2 182.5 850.8 182.5 184.2         2016                         2017                 Data on SOEs and Public Agencies in Niger Conseil Nigerien des CNUT EPIC Ministere des 2013                 Utilisateurs des Transports Transports Publics         2014 2,348.0 796.2 378.0 38.1 3,670.0 2,880.0 3,670.0 2,148.0         2015 2,964.0 893.0 236.3 51.0 3,793.0 3,023.0 3,793.0 2,609.0         2016 2,588.9 944.6 –165.2 71.4 3,586.5 2,807.5 3,586.5 2,875.0         2017                 Source: DEPPE database. 99 TABLE 18: Subsidies, by SOE, CFAF millions SOE 2013 2014 2015 2016 2017 AAJJ 150.0 151.0 150.5 108.4 96.3 AANN 0.0 0.0 115.0 135.0 109.4 ACAM 5.7 5.7 5.7 5.4 4.3 ADPME 500.0 500.0 500.0 333.9 266.0 AJE 0.0 0.0 0.0 0.0 200.0 AMNS 0.0 0.0 0.0 45.0 56.5 AN2PI 50.0 50.0 100.0 81.0 54.9 ANAB 250.0 250.0 250.0 202.5 164.0 ANAC 102.7 102.7 250.0 202.5 164.0 ANFICT 0.0 250.0 250.0 250.0 225.0 ANLTP 0.0 0.0 70.2 51.2 45.5 ANP 136.0 138.0 138.0 122.4 97.4 ANPE 60.0 130.0 60.0 48.6 39.4 ANPER 0.0 200.0 200.0 180.0 145.8 ANVD 0.0 120.0 180.5 108.0 256.8 APEIC 100.0 90.0 90.0 72.9 59.0 AVCN 100.0 100.0 100.0 81.0 63.8 BNCB 0.0 50.0 50.0 40.5 40.5 BNDA 40.0 40.0 40.0 32.4 26.2 BRMN 150.0 150.0 150.0 121.5 90.3 CAFER 8,000.0 10,000.0 5,600.0 4,675.6 3,710.0 CAIMA 10,000.0 10,000.0 0.0 0.0 0.0 CARENI 0.0 0.0 400.0 330.3 267.5 CCFN 50.0 50.0 50.0 36.0 32.4 CCOG 30.0 30.0 30.0 24.3 19.7 CDP 0.0 – 30.0 12.1 0.0 CERMES 334.1 395.1 395.1 320.0 259.2 CFPMTAYA 10.0 10.0 10.0 8.1 6.6 CFTTR 100.0 100.0 100.0 81.0 65.6 CFVE 20.6 60.6 39.4 81.0 65.6 CLACetCNRBLP 14.9 16.1 16.1 13.0 10.6 CMANI 0.0 0.0 0.0 0.0 36.0 100 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger SOE 2013 2014 2015 2016 2017 CMANI 70.0 160.0 110.0 50.0 54.7 CMB 310.0 310.0 201.3 159.4 129.1 CNCN 150.0 130.0 130.0 105.3 85.3 CNES 110.0 160.0 160.0 121.5 109.4 CNLA 73.5 100.0 100.0 78.6 68.3 CNLC 0.0 0.0 124.2 270.0 243.0 CNOU/NY 1,850.0 2,000.0 2,000.0 2,755.0 2,755.0 CNRD 80.0 100.0 100.0 162.0 131.2 CNRS 0.0 50.0 50.0 135.0 32.8 CNTS 313.2 600.0 600.0 886.0 396.7 CNUT 0.0 600.0 600.0 486.0 243.6 COU/AG 0.0 0.0 0.0 100.0 100.0 COU/DI 0.0 0.0 0.0 100.0 100.0 COU/DO 0.0 0.0 0.0 100.0 100.0 COU/EMIG 0.0 150.0 150.0 150.0 150.0 COU/MI 620.0 670.0 670.0 1,170.8 1,170.8 COU/TA 600.0 650.0 650.0 1,199.7 1,199.7 COU/TI 0.0 0.0 0.0 10.0 100.0 COU/ZR 600.0 650.0 650.0 1,229.5 1,229.5 CPTP 51.1 75.1 75.1 112.5 101.1 CRGM 265.0 265.0 265.0 214.7 173.9 EFJ 0.0 0.0 0.0 40.0 35.6 EMAIR 220.0 220.0 220.0 178.2 165.0 EMIG 575.0 600.0 459.0 150.0 371.8 ENAM 565.0 645.0 645.0 522.5 442.9 ENI 135.0 350.0 400.0 495.0 440.0 ENPC 0.0 0.0 0.0 0.0 50.0 ENSP/NY 460.3 499.3 499.3 404.4 327.6 ENSP/ZR 350.0 400.0 400.0 404.4 262.4 EPA 400.0 400.0 400.0 324.0 291.6 EST/CNIPT 0.0 50.0 50.0 40.5 32.8 FAFPA 0.0 0.0 355.6 300.0 203.5 HGR 0.0 0.0 0.0 0.0 500.0 (continues on next page) Data on SOEs and Public Agencies in Niger 101 TABLE 18: continued SOE 2013 2014 2015 2016 2017 HN/NY 3,602.8 4,150.0 4,150.0 3,361.5 3,025.4 HN/ZR 1,478.2 1,573.1 1,283.1 1,274.2 1,196.8 HNL 1,689.4 1,878.8 1,878.8 1,521.8 1,626.3 IAI 140.0 140.0 140.0 113.4 990.0 IFAENF 75.0 113.2 113.2 60.8 108.7 IFTIC 170.0 229.0 229.0 198.0 158.4 IGNN 120.0 120.0 120.0 97.2 69.5 INDRAP 70.0 200.0 150.0 118.0 104.9 INJS 226.0 226.0 226.0 135.0 186.1 INRAN 653.0 1,532.1 1,532.1 1,203.7 557.5 INS 2,102.0 2,102.0 2,102.0 1,702.6 1,902.6 IPDR 127.2 129.7 129.7 135.7 106.7 ISP 221.7 238.4 238.4 193.2 156.5 LABOCEL 158.3 158.3 102.7 80.4 65.1 LANSPEX 196.0 227.8 227.8 184.5 149.4 MIG 737.9 848.5 848.5 687.3 618.6 MNBH 200.0 170.0 170.0 120.0 108.0 ONACVG 62.8 60.0 60.0 45.0 44.4 ONAHA 703.5 715.6 717.6 563.8 449.5 ONEECS 200.0 220.0 178.2 160.4 142.3 ONEF 50.0 150.0 150.0 121.5 98.4 ONEP 190.0 250.0 250.0 207.9 166.3 ONPC 250.0 253.0 253.0 213.8 173.2 ONPE 600.0 600.0 600.0 486.0 393.7 ORTN 1,250.0 1,250.0 1,250.0 898.3 718.7 PC 150.0 150.0 150.0 121.5 98.4 PO 50.0 50.0 50.0 34.0 29.7 SAFEM 100.0 100.3 100.3 90.3 171.3 SGSK 120.0 100.0 100.0 76.5 60.1 SNP 194.8 394.8 361.7 387.0 218.8 SONIPHAR 300.0 325.0 325.0 292.0 210.6 102 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger SOE 2013 2014 2015 2016 2017 UAMD 8,000.0 10,500.0 10,500.0 8,032.5 7,630.9 UAZ 0.0 0.0 0.0 330.8 314.2 UAZ, UDI, UDO et UTI 0.0 1,500.0 1,500.0 0.0 0.0 UDDM 1,500.0 1,575.0 1,575.0 1,204.9 2,121.5 UDI 0.0 0.0 0.0 196.0 186.2 UDO 0.0 0.0 0.0 244.5 232.2 UTA 1,200.0 1,275.0 1,275.0 975.4 1,376.3 UTI 0.0 0.0 90.0 376.3 357.4 UZR 1,200.0 1,275.0 1,275.0 975.4 1,852.8 TOTAL 56,090.8 67,604.3 53,837.1 47,479.6 46,653.1 Source: DEPPE. Data on SOEs and Public Agencies in Niger 103 TABLE 19: Subsidies by Ministry 104 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 631 Subventions aux etablissements publics 03 Cabinet du Premier – – – 187.5 456.9 522.4 420.0 429.9 701.3 1,254.9 2,527.3 4,459.1 4,142.7 3,738.0 1,859.7 Ministre 06 Ministere des 2,526.1 2,582.7 4,355.9 4,454.4 6,137.7 5,728.0 7,439.0 8,530.3 11,072.6 14,533.5 18,836.0 21,849.4 21,653.1 19,797.9 20,556.1 Enseignements Superieur, de la Recherche et de L’innovation 08 Ministere des Postes, 693.0 693.0 935.0 1,045.0 1,169.2 945.0 708.8 1,051.8 2,092.5 1,630.5 1,766.0 50.0 45.0 36.5 29.5 des Telecommunications et de l’Ecomie Numerique 09 Ministere de la – 8.1 305.0 128.1 133.6 133.6 133.6 120.7 132.8 765.2 1,056.6 287.7 262.6 404.6 234.6 Jeunesse, des Sports 11 Ministere des – – 117.6 109.2 190.0 520.0 558.2 305.6 797.4 915.1 968.2 621.7 971.2 646.1 491.1 Enseignements Professionnels et Techniques 12 Ministere des Affaires – – – – – – – 0.7 9.8 12.8 47.7 17.6 18.0 15.5 11.2 Etrangeres, de la Cooperation, de L’integration Africaine et des Nigeriens a l’Exterieur 13 Ministere du Plan – – – – – – – – – – – 78.9 108.0 – – 14 Ministere Delegue a – – – – – – 14.8 – – – – – – – – l’Integration Africaine, 15 Ministere de la – – – – – – – – 50.0 – – 60.2 60.0 45.0 44.4 Defense Nationale 23 Ministere de la – – – – – – – – – – – 1,887.0 1,698.3 1,338.2 1,071.7 Communication 25 Ministere de – – – – 56.7 – – 108.2 119.0 119.0 619.0 446.0 446.0 546.4 703.3 l’Interieur, de la Securite Publique, de la Decentralisation et des Affaires Coutumieres et Religieuses 27 Ministere de la – – – – – 221.4 166.1 – – – – 636.1 572.5 447.3 371.7 Renaissance Culturelle, des Arts et de la Modernisation Sociale Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 40 Ministere de l’Emploi – – – – – – – – – – – 365.0 292.6 315.3 222.6 et de la Protection Sociale 41 Ministere de la – – 50.0 45.5 50.0 90.0 129.1 124.4 129.7 160.0 170.0 – 360.0 297.3 240.3 Fonction Publique et de la Reforme Administrative 43 Ministere Charge des – – – – – 60.0 60.0 – – – – – – – – Affaires Religieuses et de l’Action Humanitaire 47 Ministere des 3,948.4 2,213.8 691.5 733.2 829.6 1,162.7 1,397.2 1,392.8 1,872.6 10,672.7 15,664.8 19,007.4 11,714.6 19,850.3 16,811.2 Finances 51 Ministere du Tourisme – – – – – – 55.2 – – 48.7 – 100.3 225.3 121.3 196.7 et de l’Artisanat 52 Ministere du – – – – – – – – – – 599.9 800.0 – – – Commerce et de la Promotion du Secteur Data on SOEs and Public Agencies in Niger Prive 53 Ministere des – – 56.2 77.0 77.0 77.0 57.7 119.2 141.0 361.6 202.7 202.7 193.5 194.4 157.1 Transports 54 Ministere de 665.2 517.3 800.0 709.5 1,162.4 5,951.2 637.0 851.3 2,075.7 15,035.4 11,614.0 2,537.4 2,303.9 1,822.6 1,697.4 l’Agriculture et de l’Elevage 55 Ministere de l’Elevage – – 21.9 27.3 22.5 30.0 22.5 – – 504.8 488.9 589.5 345.2 279.0 – 56 Ministere du – – – – – – – – – – – – – 86.4 230.7 Developpement Communautaire et de l’amenagement du Territoire 57 Ministere de l’Energie – – – – – – – – – 152.0 110.0 460.0 386.5 307.4 248.5 et du Petrole 58 Ministere de – 4,003.7 131.7 128.9 38.9 36.9 27.7 45.9 51.0 57.1 8,057.1 75.1 67.6 101.3 90.8 l’Equipement 59 Ministere des Mines – – 343.0 476.1 523.0 523.0 341.3 409.5 480.0 294.0 684.8 685.0 661.5 535.8 434.7 et de l’Industrie 60 Ministere de – – – – – – 15.4 – – – – 73.9 91.9 47.0 42.1 l’Environnement et du Developpement Durable 61 Ministere De – – 62.0 46.5 62.0 107.0 122.0 130.6 168.0 183.0 219.9 601.9 564.5 673.7 537.9 L’enseignement Primaire, De L’alphabetisation, De La Promotion Des Langues Nationales Et De L’education Civ (continues on next page) 105 TABLE 19: continued 106 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 62 Ministere De – – – – – – – 20.5 44.6 52.5 446.0 11.6 10.4 8.3 5.8 L’hydraulique Et De L’assainissement 64 Ministere De La Sante 3,790.1 3,958.7 4,223.5 3,910.3 4,343.9 4,286.6 4,640.0 4,416.9 5,568.9 8,188.5 15,742.8 11,839.7 13,169.2 10,103.1 12,488.9 Publique 65 Ministere De La – – – – – – – – – – – – – – – Promotion De La Femme Et De La Protection De L’enfant 68 Ministere Des – – – – 106.0 106.0 105.5 95.7 97.5 106.0 120.0 120.0 108.0 87.5 62.4 Domaines Et De L’habitat 631 Subventions Aux 11,622.8 13,977.3 12,093.0 12,078.4 15,359.5 20,500.8 17,051.2 18,154.1 25,604.3 55,047.4 79,941.8 67,863.3 60,472.3 61,846.3 58,840.6 Etablissements Publics Total 632 Subventions Aux – – – – – – – – – – – – – – – Entreprises Publiques Et Semi-Publiques Non Financieres 32 Haute Autorite A La – – – – – – – – – – – – – – 150.0 Consolidation De La Paix (Hacp) 47 Ministere Des 2,500.0 – 388.5 1,900.0 2,389.0 2,189.0 2,841.8 795.0 1,864.0 737.2 – 1,200.0 1,080.0 874.8 509.8 Finances 52 Ministere Du – – – – – – – 150.0 165.0 60.7 499.9 500.0 450.0 300.4 238.9 Commerce Et De La Promotion Du Secteur Prive 58 Ministere De – – 5,000.0 1,307.8 3,057.7 2,941.9 1,522.1 5,000.0 1,000.0 6,531.6 – 8,000.0 5,040.0 2,438.4 2,226.0 L’equipement 59 Ministere Des Mines – – – – – – – – – 165.0 100.0 100.0 90.0 72.9 57.3 Et De L’industrie 632 Subventions Aux 2,500.0 – 5,388.5 3,207.8 5,446.7 5,130.9 4,363.8 5,945.0 3,029.0 7,494.5 599.9 9,800.0 6,660.0 3,686.5 3,182.0 Entreprises Publiques Et Semi-Publiques Non Financieres Total Grand Total 14,122.8 13,977.3 17,481.5 15,286.2 20,806.1 25,631.8 21,415.0 24,099.1 28,633.3 62,541.9 80,541.8 77,663.3 67,132.3 65,532.8 62,022.7 Source: BOOST 2017. Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger TABLE 20: Number of Employees per SOE   2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 NIGELEC                 1,096 1,074 1,099 1,167 1,189     SOMAIR 624 589 559 561 577 577 601 695 824 995 1,132 1,182 1,206 1,219 1,145 COMINAK 1,046 1,046 1,027 1,040 1,068 1,048 1,168 1,212 1,184 1,187 1,158 1,128 1,110 1,096 1,017 SONICHAR 376 309 301 290 283 282 281 280 343 354 354         SML         171 221 109 196 201 217 225         BCM               223 237 204 210         SOMINA                 70 415 280         IMOURAREN                   126 196 243 268 298   Data on SOEs and Public Agencies in Niger CNPC-NP                         284     SORAZ                         731     SONIDEP                             311 NIGELEC                             1,328 SEEN                             636 Niger Telecom                             1,129 Source: EITI 2016 Report. 107 TABLE 21: Sample of SOE Financial Ratios Salary/ Salary/ Result/ Result/ Turn- Total Debt/ SOE Sector Category Year Assets Equity Over Cost Assets SEEN Eau SEM 2013 4.7% 22.7% 17.9%   79.1%     2014 5.3% 19.0% 19.8% 21.5% 72.3% 2015 0.9% 4.4% 19.8% 20.6% 79.3% 2016 –0.3% –1.2% 19.6% 20.4% 91.4% 2017 4.1% 18.7% 18.8% 20.8% 77.9% CAIMA Agriculture EPIC 2013 –50.0% 399.6% 10.2% 2.8% 118.4% 2014 –7.9% 29.9% 12.5% 2.3% 177.8% 2015 –5.7% 35.0% 6.1% 4.1% 116.3% 2016 –16.2% 64.2% 10.4% 5.1% 125.2% ONPPC Santé EPIC 2013 29.3% –655.1% 16.5% 17.7% 104.4% 2014 –12.5% –7,553.0% 16.1% 10.2% 99.8% 2015 9.9% 99.9% 19.4% 14.8% 90.1% 2016 5.3% 26.7% 19.7% 13.8% 80.2% 2017 –12.3% –212.0% 32.1% 19.1% 94.2% SONUCI Urbanisme SEM 2013     2.4% 6.7% 88.9% 2014 13.6% 62.3% 6.6% 46.6% 78.1% 2015 0.3% 1.6% 9.8% 10.1% 80.8% 2016 –15.3% 10.0% 10.0% 4.7% 88.5% LONANI Loterie EPIC 2013 8.4% 36.8% 9.7% 10.0% 77.1% 2014 14.4% 43.3% 7.5% 7.6% 66.7% 2015 18.6% 38.2% 6.6% 7.1% 51.2% IMSA Mines SEM 2013 –0.1% –0.9% 93.5% 2014 –4.1% –305.0% 98.7% 2015 –33.1% 105.2% 131.5% SOPAMIN Mines SE 2013 5.4% 13.1% 1.0% 1.0% 58.9% 2014 5.7% 9.2% 2.1% 2.1% 38.1% 2015 2.2% 6.5% 1.1% 1.2% 66.0% 2016 –43.5% –151.2% 3.8% 2.5% 71.2% 2017 12.8% 32.7% 3.8% 4.2% 60.9% 108 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger Salary/ Salary/ Result/ Result/ Turn- Total Debt/ SOE Sector Category Year Assets Equity Over Cost Assets OPVN Agriculture EPIC 2013 –17.3% 101.3% 21.9% 9.0% 117.1% 2014 –12.1% 45.5% 7.1% 3.3% 126.6% 2015 –14.5% 32.5% 9.9% 3.9% 144.6% 2016 –6.6% 10.0% 11.4% 166.2% 2017 –43.1% 44.3% 8.0% 197.4% SONIDEP Pétrole SE 2013 5.9% 40.2% 0.6% 0.6% 85.4%   2014 4.1% 23.5% 0.7% 0.7% 82.6%       2015   8.6% 1.0% 1.0%   2016 1.6% 11.6% 1.0%   86.3% 2017 0.8% 6.1% 1.1% 1.1% 86.9% NIGER Postes SE 2013 1,358.5% 11.2%     –12,030.1% POSTE 2014 –1,364.0% –13.2% 78.8% 704.9% –10,218.2% 2015 –216.6% –46.5% 115.1% 844.6% –366.1% CNUT Transport EPIC 2014 10.3% 13.1% 33.9% 37.1% 21.5% 2015 6.2% 7.8% 30.1% 34.2% 20.3% 2016 –4.6% –5.9% 36.5% 32.9% 21.7% 2017 1.1% 1.4% 34.9% 34.2% 22.5% Source: DEP/PE database. Data on SOEs and Public Agencies in Niger 109 ANNEX 7 Legal and Regulatory Framework for Procurement WAMEU Directives • Directive n° 04/2012/CM/UEMOA du 28 Septembre 2012 relative à l’éthique et à la déontologie dans les MP/DSP • Directive n° 02/2014/CM/UEMOA du 28 Juin 2014 régissant la maîtrise d’ouvrage public déléguée au sein de l’UEMOA • Directive n° 04/2005/CM/UEMOA du 09 Décembre 2005 portant procé- dures de passation, d’exécution et de règlement des marches publics et des délégations de service public dans l’Union Economique et Monétaire Ouest Africaine • Directive n° 05/2005/CM/UEMOA du 09 Décembre 2005 portant con- trôle et régulation des marchés publics et des délégations de service pub- lic dans l’Union Economique et Monétaire Ouest Africaine 111 National Legislation and Regulation • Loi n° 2011-37 du 28 Octobre 2011 portant principes généraux, contrôle et régulation des marchés publics et des délégations de service public au Niger • Décret n° 2011-686/PRN/PM du 29 Décembre 2011 portant Code des Marchés Publics et des Délégations de Service Public • Décret n° 2011-687/PRN/PM du 29 Décembre 2011 portant Attributions, Composition et Modalités de fonctionnement de l’Agence de Régulation des Marchés Publics • Décret n° 2011-688/PRN/PM du 29 Décembre 2011 portant code d’éthique des marchés publics et des délégations de service public • Décret n° 2013-002/PRN/PM du 04 Janvier 2013 portant création des Directions des Marchés Publics et des Délégations de Service Public au sein des Ministères • Décret n° 2013-569/PRN/PM du 20 Décembre 2013 portant Code des Marchés Publics et des Délégations de Service Public • Décret n° 2013-570/PRN/PM du 20 Décembre 2013 portant modalités particulières de passation des marchés de travaux, d’équipements, de fournitures et de services concernant les besoins de défense et de sécurité nationales • Décret n° 2014-127/PRN/PM du 26 Février 2014 complétant le décret n° 569/PRN/PM du 20 décembre 2013 portant code des marchés publics et des délégations de service public et déterminant les fautes et les sanctions applicables en matière de marchés publics et des délégations de service public • Décret n° 2014-070/PRN/PM du 12 Février 2014 déterminant les mis- sions et l›organisation de la direction générale du contrôle des marchés publics et des engagements financiers et fixant les attributions des con- trôleurs des marchés publics et des engagements financiers • Décret n° 2014-5005/PRN/PM/MU/L du 31 Juillet 2014 déterminant les modalités de mise en œuvre de la maîtrise d›ouvrage publique • Décret n° 2016-641/PRN/PM du 01 Décembre 2016 portant Code des Marchés Publics et des Délégations de Service Public • Arrêté n°0034/CAB/PM/ARMP du 21 Janvier 2014 fixant les délais dans le cadre de la passation des marchés publics et des délégations de service public • Arrêté n°0035/CAB/PM/ARMP du 21 Janvier 2014 portant liste des pièces à fournir par les soumissionnaires/candidats pour être éligibles aux marchés publics et délégations de service public 112 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger • Arrêté n°0036/CAB/PM/ARMP du 21 Janvier 2014 portant modalités de signature et d’approbation des marchés publics et des délégations de ser- vice public • Arrêté n°0037/CAB/PM/ARMP du 21 Janvier 2014 fixant les seuils dans le cadre de la passation et l’exécution des marchés publics et des déléga- tions de service public • Arrête n°175/EF/DGCMP/EF du 12 Mai 2014 portant organisation et attributions de la Direction des Autorisations et des Dérogations du Suivi du Contrôle de la Passation des Marchés Publics et des délégations de service public et des engagements financiers à la Direction Générale du Contrôle des Marchés Publics et des Engagements Financiers • Arrête n°176/EF/DGCMP/EF du 12 Mai 2014 portant organisation et attributions de la Direction de l’Information et des Statistiques à la Direc- tion Générale du Contrôle des Marchés Publics et des Engagements Financiers • Arrête n°177/EF/DGCMP/EF du 12 Mai 2014 portant organisation et attributions de la Direction des Etudes et de la Réglementation à la Direc- tion Générale du Contrôle des Marchés Publics et des Engagements Financiers • Arrête n°178/EF/DGCMP/EF du 12 Mai 2014 portant organisation et attributions de la Direction des Appuis conseils et de la Formation à la Direction Générale du Contrôle des Marchés Publics et des Engagements Financiers • Arrêté n°0000180/CAB/PM/ARMP portant approbation de la Demande de Proposition Type pour la passation des Marchés Publics de Prestations Intellectuelles • Arrêté n°0000181/CAB/PM/ARMP du 29 Septembre 2008 portant approbation du Dossier Type d’Appel d’Offres pour la passation des Marchés Publics de Travaux • Arrêté n°0000182/CAB/PM/ARMP du 29 Septembre 2008 portant approbation du Dossier Type d’Appel d’Offres pour la passation des Marchés Publics de Fournitures et Services Courants • Arrêté n°0140/CAB/PM/ARMP du 29 Juin 2012 portant Création, Attri- butions et Organisation d’une représentation régionale de l’Agence de Régulation des Marchés Publics • Arrêté n°0141/CAB/PM/ARMP du 29 Juin 2012 portant Création, Attri- butions, Composition-type et fonctionnement de la Commission ad’ hoc d’ouverture des plis et d’évaluation des offres des Marchés Publics et des Délégations de Service Public des Etablissements Publics, Sociétés d’Etat et Sociétés d’Economie Mixte Legal and Regulatory Framework for Procurement 113 • Arrêté n°0142/CAB/PM/ARMP du 29 Juin 2012 portant Création, Attri- butions, Composition-type et fonctionnement de la Commission ad’ hoc d’ouverture des plis et d’évaluation des offres des Marchés Publics et des Délégations de Service Public des Collectivités Territoriales • Arrêté n°0144/CAB/PM/ARMP du 29 Juin 2012 portant attributions des Divisions Marchés Publics • Arrêté n°0145/CAB/PM/ARMP du 29 Juin 2012 portant Création, Attri- butions, Composition-type et fonctionnement de la Commission ad’ hoc d’ouverture des plis et d’évaluation des offres des Marchés Publics et des Délégations de Service Public de l’Etat • Arrêté n°0080/CAB/PM/ARMP du 03 Mai 2017 portant approbation du dossier type d’appel d’offres pour la passation des conventions de déléga- tions de service public • Arrêté n°0081/CAB/PM/ARMP du 03 Mai 2017 portant approbation de la demande de proposition type pour la passation des marchés de presta- tions intellectuelles et du dossier type de présélection des candidats aux marchés de prestations intellectuelles • Arrêté n°0082/CAB/PM/ARMP du 03 Mai 2017 portant approbation du dossier type d’appel d’offres pour la passation des marchés de fournitures et/ou de services connexes • Arrêté n°0083/CAB/PM/ARMP du 03 Mai 2017 portant approbation du dossier type d’appel d’offres pour la passation des marchés de travaux, du dossier type de pré-qualification des candidats aux marchés de travaux et du guide de l’utilisateur du dossier type de pré-sélection aux marchés de travaux • Arrêté n°0084/CAB/PM/ARMP du 03 Mai 2017 portant approbation du dossier type d’appel d’offres pour la passation des marchés de services courants • Arrêté n°0133/PM/ARMP du 24 Juillet 2017 portant création, attribu- tions, composition-type et fonctionnement des commissions des marchés publics et des délégations de services public de l’Etat • Arrêté n°0134/CAB/PM/ARMP du 24 Juillet 2017 portant création, attri- butions, composition-type et fonctionnement des marchés publics et des délégations de services public des collectivités territoriales • Arrêté n°0135/PM/ARMP du 24 Juillet 2017 portant création, attribu- tions, composition-type et fonctionnement des commissions des marchés publics et des délégations de services public des établissements publics, Sociétés d’Etat et Sociétés à participation financière publique majoritaire 114 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger • Arrêté n°0136/PM/ARMP du 24 Juillet 2017 fixant les délais dans le cadre de la passation des marchés publics et des délégations de service public • Arrêté n°0137/PM/ARMP du 24 Juillet 2017 portant liste des pièces à fournir par les soumissionnaires/candidats pour être éligibles aux marchés publics et délégations de service public • Arrêté n°0139/PM/ARMP du 24 Juillet 2017 fixant les seuils dans le cadre de la passation des marchés • Arrêté n°0140/CAB/PM/ARMP du 24 Juillet 2017 portant modalités de signature et d’approbation des marchés publics et des délégations de ser- vice public • Décision N° 02 CAB/PM/ARMP du 21/01/2014 portant approbation du manuel du code des marchés publics du Niger-ETAT • Décision N° 04 CAB/PM/ARMP du 21/01/2014 portant approbation du manuel du code des marchés publics du Niger-Etablissements publics, Sociétés d’Etat et Sociétés d’Economie Mixte • Décision N° 05 CAB/PM/ARMP du 21/01/2014 portant approbation du manuel du code des marchés publics du Niger-collectivites territoriales Legal and Regulatory Framework for Procurement 115 ANNEX 8 Overview of SOEs in Niger Brief Description of the Five SOEs Highlighted in This Study The Niger Water Corporation (SPEN) is an asset-holding company in charge of developing the water sector and controlling the operator’s service quality. It is under the technical oversight of the Ministry of Water and Sani- tation. Its operation cuts across different activities, such as management of assets, development and monitoring of the investment program, rehabilita- tion works, and renewal and extension of water sector infrastructure. SPEN collaborates closely with SEEN, the private operator responsible for the operation of the water service, production and distribution of drinking water, and commercial activities. These two companies oversee the water supply in 55 centers in the country (including all big cities and some second- ary centers). According to the latest data available, for 2017, SPEN had an operating balance equivalent to 0.05 percent of GDP, equity of 0.10 percent of GDP, and gross debt of 3.5 percent of GDP. Its net contribution to the cen- tral government was zero. 117 The Nigerien Petroleum Products Company (SONIDEP) is an SE under the technical oversight of the Ministry of Commerce and Private Sec- tor Promotion. SONIDEP’s main activities are the purchase, storage, and resale of petroleum products. It also ensures the continuity and dependabil- ity of supply in hydrocarbons and derivative products for Niger, including the constitution and management of security stocks. According to the latest data available, for 2017, SONIDEP had an operating balance equivalent to 0.02 percent of GDP, equity of 0.68 percent of GDP, and gross debt of 3.44 per- cent of GDP. Its net contribution to the central government was 0.10 percent of GDP (comprising taxes of 0.11 percent of GDP, dividends of 0.01 percent of GDP, and transfers received of 0.02 percent of GDP). The Niger Mining Company (SOPAMIN) is an SE under the oversight of the Ministry of Mines and manages the interests of the Republic of Niger in mining companies that operate in the country. SOPAMIN holds stakes in eight mining companies. According to the latest data available, for 2017, SOPAMIN had an operating balance equivalent to 1.20 percent of GDP, equity of 0.20 percent of GDP, and gross debt of 0.31 percent of GDP. Its net contribution to the central government was 0.40 percent of GDP (composed entirely of taxes). The Agricultural Materials and Inputs Procurement Body (CAIMA) is under the technical oversight of the Ministry of Agriculture and Livestock. Its objectives are to sell, at a subsidized price, the agricultural inputs (such as agricultural equipment, fertilizers, phytosanitary products, and seeds) needed in rural areas. According to the latest data available, for 2017, CAIMA had an operating balance equivalent to –0.06 percent of GDP, equity of –0.17 percent of GDP, and gross debt of 0.58 percent of GDP. Its net contribu- tion to the central government was zero. The Niger Food Products Office (OPVN) is under the technical over- sight of the Ministry of Commerce and Private Sector Promotion. Its mis- sion involves the purchase, storage, sale, quality control, and phytosanitary treatment of cereals under the framework of the national mechanism for the prevention and management of crises with regard to the national safety stock and the strategic food reserve. It is also responsible for the manage- ment of food aid and of infrastructure, equipment, and material assigned to food aid and food security initiatives. According to the latest data available, for 2017, OPVN had an operating balance equivalent to –0.15 percent of GDP, equity of –0.46 percent of GDP, and gross debt of 0.88 percent of GDP. Its net contribution to the central government was 0.21 percent of GDP (comprising taxes of 0.03 percent of GDP and transfers received of 0.24 per- cent of GDP).  118 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger SOEs in the Extractives Sector Agadem oil fields exploitation. The state is a shareholder of up to 15 per- cent of the exclusive exploitation rights of Phase 1 and Phase 2 of the Aga- dem field. China National Petroleum Corporation-Niger Petroleum (CNPC-NP) and the Overseas Private Investment Corporation (OPIC) hold, respectively, 65 percent and 20 percent of these rights. CNPC-NP is the operator of the Agadem field. According to a report by the Extractive Indus- tries Transparency Initiative, it contributed CFAF 63.1 billion in tax reve- nues, or 38.9 percent of revenues from the extractives sector, in 2014. Refining Corporation of Zinder (SORAZ). SORAZ commenced activi- ties in 2011. The company is 60 percent owned by CNPC-NP and 40 percent by the Republic of Niger. It specializes in the refinery of crude oil into super, diesel, liquefied petroleum gas, and kerosene, and has a processing capacity of approximately 20,000 barrels of refined oil per day, including 7,000 that are intended for domestic consumption and the rest for export. SORAZ does not appear in the DEP/PE database. According to an EITI report, SORAZ paid CFAF 32.9 billion in taxes, or 20.3 percent of revenues from the extrac- tives sector, in 2014. Imouraren SA. Imouraren’s treatment plant for uranium ore should pro- duce approximately 5,000 tons of uranium metal per year for 35 years and create more than 5,000 direct and indirect jobs. This increase in production would make Niger the world’s second-largest producer of uranium. The investment was estimated at euro 1.2 billion. Initially, its capital (CFAF 50 billion) was divided between Areva NC (66.65 percent) and the Mining Company of Niger (Société du Patrimoine des Mines du Niger, or SOPAMIN) (33.35 percent). In 2009, the South Korean company, KEPCO, bought a 10 percent participation stake in the project. The project is currently on hold for economic reasons, following a fall in the price of uranium. In 2015, it had CFAF 6,603 million in personnel costs, a negative net result of CFAF 167,200 million (about euro 255 million), and paid taxes and fees of approxi- mately CFAF 509.6 million. Other Important SOEs in Niger National Lottery of Niger (LONANI). As an EPIC under the technical oversight of the MoF, LONANI has a public service mission focused ­primarily on the mobilization of domestic savings through the organization of money- based games. In addition, its legally granted monopoly on money-based Overview of SOEs in Niger 119 games gives this agency a de facto mandate to control actors with permission to organize games. In 2016, LONANI had a turnover of CFAF 16.8 billion, CFAF 955.4 million in personnel charges, and a net result of CFAF 2.2 billion, and paid taxes and fees of approximately CFAF 2.4 billion. Niger Urban and Construction Corporation (SONUCI). An anony- mous society created in November 1962 under the oversight of the Ministry of Domains and Habitat, SONUCI oversees the development of plots (water supply electrification, road networks, gutters, schools, dispensaries, green spaces, and so on) and social housing. In 2014 (the latest figures available), SONUCI had a turnover of CFAF 4.5 billion, personnel costs of CFAF 297 million, and a net result of CFAF 3.9 billion CFAF, while paying taxes of approximately CFAF 16.6 million. Niger Office of National Pharmaceutical and Chemical Products (ONPPC) and Niger Pharmaceutical Industry Corporation (SONI- PHAR). These are EPICs under the oversight of the Ministry of Public Health. SONIPHAR’s mission is the manufacturing and marketing of generic essential drugs and medical supplies. It received CFAF 1.3 billion in grants between 2013 and 2017. Other financial information is not available. ONPPC is a wholesale-retailer with a monopoly on the importation of pharmaceuti- cal products. In 2015 (the latest data available), ONPPC had a turnover of CFAF 4.3 billion, personnel costs of CFAF 832.8 million, and a net result of CFAF 594.5 million, while paying taxes and fees of approximately CFAF 34.3 million. It received CFAF 10.7 billion in grants between 2013 and 2017. 120 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger ANNEX 9 Overview of OHADA The Organisation for the Harmonization of Corporate Law in Africa (OHADA) was established with the Treaty on the Harmonization of Business Law in Africa signed on October 17, 1993, in Port-Louis, Mau- ritius, and revised in Quebec, Canada, on October 17, 2008. The following 17 states are members of OHADA: Benin, Burkina Faso, Cameroon, Central African Republic, Côte d’Ivoire, Congo, Comoros, Gabon, Guinea, Guinea Bissau, Equatorial Guinea, Mali, Niger, the Democratic Republic of Congo, Senegal, Chad, and Togo. OHADA’s main objective is to address legal and judicial insecurity in member states. OHADA encompasses 10 Uniform Acts: 1. Uniform Act, revised on December 15, 2010, on the Organization of Securities; 2. Uniform Act of December 15, 2010, on general commercial law; 3. Uniform Act relating to the right of arbitration of March 11, 1999; 4. Uniform Act relating to commercial companies and economic interest groups of January 30, 2014; 121 5. Uniform Act of January 26, 2017, relating to accounting laws and finan- cial information, a legal corpus to which the Revised OHADA account- ing system (SYSCOHADA) is annexed. The revised SYSCOHADA includes, on the one hand, the General Accounting Plan of OHADA and, on the other hand, the accounting regime for consolidated and combined accounts; 6. Uniform Act of March 22, 2003, relating to the transport of goods by road; 7. Uniform Act on the organization of simplified recovery procedures and measures of execution, adopted on April 10, 1998; 8. Uniform Act on the organization of collective procedures for the dis- charge of liabilities of September 10, 2015; 9. Uniform Act of December 15, 2010, relating to the right of cooperative societies; and 10. Uniform Act relating to mediation, adopted on November 23, 2017. These acts have and will continue to have an important impact on the way that companies must operate, including EPICs, SEs, and SEMs, and an update of the legal framework for EPICs, SEs, and SEMs will be necessary to align it with the requirements of the OHADA Law. For example, the Uniform Act governing the establishment and functioning of commercial companies and economic interest groups of the organization’s member countries entered into force on May 5, 2014, after which the compa- nies had two years to make their statutes compliant. According to interviews conducted in preparation for this study, SEs and SEMs have not yet done so. The model statutes have also not yet been updated. 122 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger ANNEX 10 Action Plan This three-year, sequenced action plan proposes a series of measures designed to respond in a realistic and feasible way to the main gover- nance challenges faced by Niger’s SOEs. The proposed measures are appropriate within the context of Niger’s public sector, following a selective approach that sets priorities that have been deemed achievable and are sup- ported by political will. The action plan aims to provide a tracking system to support the identification and implementation of priorities. Whereas the first 24 months focus mainly on fundamental aspects such as financial over- sight, institutional strengthening, financial reports, and follow-up on fiscal risk, the remaining 12 months address other governance reforms that can build on the fundamentals. The action plan aims to strengthen the oversight of SOEs’ financial performance and to introduce the function of monitoring SOEs’ fiscal risks. The objective of the action plan is to provide a participatory tool for the government to use in defining priorities and a timetable for imple- menting SOE sector reforms. The action plan is a contribution to the MoF reform program, developed in continuity with reforms already under imple- mentation. For several years, the GoN has followed a focused and strategic approach to progressively reforming SOEs. These reforms will need to be continued and maintained to improve SOEs’ financial and operational 123 performance. This action plan aims to improve the overall SOE regulatory and institutional framework, to strengthen the management of the SOE portfolio, and to control the fiscal risk emanating from SOEs. Implementation and Stakeholder Involvement The action plan was developed in consultation with key stakeholders. The action plan was drafted following the presentation of the results of this study to the authorities, under the leadership of the DEP/PE. The draft action plan was discussed during a one-day workshop with key stakehold- ers, then discussed internally in the MoF before the MoF’s adoption of the final action plan. Strong leadership and the establishment of a coalition in favor of reform are necessary for reform progress. High-level leadership and sus- tainable policy support are key factors in the success of SOE sector reforms, given the contextual implications of these reforms for the government. Within the executive branch, beyond the MoF, support from sectoral minis- tries and SOEs is crucial to reform implementation. Interactions among these different actors are essential in determining and successfully under- taking reform. In addition, it is important to put in place an interdepartmen- tal working group and organize regular sensitization seminars to provide information, build a reform coalition, and ensure a consensual approach.  Within the executive branch, coordination within the MoF and with sectoral ministries is essential for effective guardianship of parastatal entities. Considering the technical oversight role of sectoral ministries and the interaction between service provision and financial performance, close cooperation with sectoral ministries is the key to reform success. Similarly, within the MoF, a clear definition of responsibilities and close coordination between the General Directorate of Budget and the proposed new General Directorate on SOEs will be crucial for the development of the latter. To achieve these objectives, the action plan is divided into four main axes, supported by other governance reforms that build on fundamen- tal reform progress:  1. Strengthen the legal, regulatory, and institutional framework for finan- cial oversight. 2. Improve financial information and the management and monitoring of fiscal risk and performance. 3. Increase transparency and improve audits. 4. Legal reform. 124 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger Axis A: Strengthen the Institutional Framework for Financial Oversight The DEP/PE could be elevated to the rank of a General Directorate. The transformation of the DEP/PE into a new General Directorate of SOEs (DGE/EP) could help to mitigate the limits of the entity, in particular with regard to the fragmentation of financial oversight and the limited visibility and capabilities of the current DEP/PE. This transformation would also help to establish within the MoF a unit that is more autonomous and dedicated exclusively to the financial oversight function, reporting directly to the min- ister. This reform could be started with the appointment of a director gen- eral for the new directorate and the creation of an interdepartmental working group comprising all key stakeholders with an interest in the man- agement of SOEs. This working group would have the mission of preparing a strategic plan for the new unit; developing its guidelines, manuals, and pro- cedures; defining its mandate, organization, and staff; and outlining needed training, equipment, and materials. Axis B: Improve Financial Information and Monitoring of Fiscal Risk and Performance Enhancing the collection of data, and ensuring the regular and timely publication of annual financial statements, are critical. Improving the management and monitoring of SOE performance and associated fiscal risks requires quality data. To that end, it is critical to ensure regular and timely publication of annual financial statements; the establishment of a database and monitoring dashboard for SOE financial information; and the creation of a system for the collection and transmission of financial reports and statements. Producing an annual aggregated report on SOEs and strengthening the management and monitoring of fiscal risks are high priorities. Pre- paring an annual aggregated report on SOEs—first for government use, and later for publication—will provide critical information to improve oversight of the sector. A methodology for analyzing and following up on fiscal risks needs to be developed and adopted, and a census and assessment of current performance contracts conducted will also be critical. Action Plan 125 Axis C: Increase Transparency and Improve Audits The regular publication of audited financial statements would improve transparency and could strengthen SOE governance and performance. More access to information could allow more follow-up, which could in turn encourage better performance and help to strengthen the governance of SOEs. To start, the DEP/EP should identify existing SOEs and publish the list each year. Transparency could also be improved through: (i) regular pub- lication of annual reports and financial audits of SOEs on the MoF website, as well as on the website of the SOE, if applicable; (ii) publication by the DEP/PE of an annual report on the SOE portfolio and fiscal risks; (iii) publi- cation, after a census, of a list of GA presidents and members, board chairs and members, and senior managers; and (iv) publication, after a census, of the remuneration and benefits of GA presidents and members, board chairs and members, and senior management. Axis D: Legal Reforms Updating the legal framework is required to enhance the performance of the SOE sector and limit fiscal risk. The updated legal framework will formalize the mechanism that is currently in place for financial oversight (the dual model) and grant an important role to the MoF in creating SOEs and conducting SOE financial oversight to ensure better fiscal management and monitoring. Additionally, it will contribute to expanding the corporati- zation of SOEs and defining clear criteria for their establishment. 126 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger TABLE 22: SOE Action Plan and Sequencing of Implementation In the 12 Months after In the 24 Months after Expected Results Three Years Area of Action Validation of the Action Plan Validation of the Action Plan after Validation of the Action Plan Institutional Framework and Financial Oversight Institutional • Passage of decree • Adoption of a new ordinance • DGE/EP operational and strengthening creating a General governing the governance and ensuring the financial oversight of financial Directorate of SOEs oversight of SOEs, with a of SOEs oversight (DGE/EP) in the MoF comprehensive and clear definition • Annual reports prepared and function • Appointment of the of the role of the financial oversight published on the director general of the body (DGE/EP). implementation of the National DGE/EP • Development and approval of a Strategy for SOEs • Development of strategic plan for the DGE/EP, • Workshops organized for the procedures for including: government and stakeholders coordination between the – Mandate and detailed functions; on the National Strategy for DGE/EP and the sectoral – Detailed organization chart and SOEs ministries job descriptions; – Inventory of needed personnel, • Training program for DGE/EP • Requirement that the equipment, and budget; staff conducted minutes of the meetings – Assessment of training needs; • DGE/EP staffed in accordance of GAs and boards of and with the recommendations of directors be – Expected progress and the Strategic Plan communicated to the achievements over three years. DGE/EP • Comprehensive legal • Preparation of guides and procedural framework in place defining manuals on: financial oversight for all – The working procedures of the categories of companies and DGE/EP; and public institutions – Procedures for coordination • Publication of professional between the DGE/EP, the criteria for the selection of GA Treasury, General Tax and board members, including Directorate, and National Social their president and chair, Security Fund to share respectively information regularly on guarantees, on-lent debt, and other significant debts. • Definition of functions of the oversight institution (DGE/EP), including: – Census/stocktaking of all SOEs; – Development of a National Strategy for SOEs; – Regular publication of SOE information (annual aggregated reports) on the MoF website; – Systematic participation of the DGE/EP in discussions on SOE subsidies from the start of the budget process; – Participation in the creation of new SOEs; – Regular monitoring of SOE fiscal risk through a monitoring tool adapted to the context of Niger; – Follow-up on SOE audits; and – Participation in the appointment of boards of directors. • Development of a plan and timetable for the gradual introduction of performance contracts. (continues on next page) Action Plan 127 TABLE 22: continued In the 12 Months after In the 24 Months after Expected Results Three Years Area of Action Validation of the Action Plan Validation of the Action Plan after Validation of the Action Plan Financial Information, and Management and Monitoring of SOE Fiscal Risk and Performance Financial • Letter of notification from • Database with financial and budget • Aggregated SOE portfolio information and the MoF to all SOEs to information prepared by the DGE/EP reports produced annually database transmit audits and for each company and public agency, • Options to strengthen financial statements for and for the aggregated portfolio. incentives for SOEs to comply 2015–16 and 2016–17 to • Development of a dashboard for the with audit requirements the DGE/EP within one DGE/EP to track key information on explored month SOEs. • Effective monitoring of SOE • Identification of needs for • Initiation of the development of a financial performance in place the current database of financial model to analyze SOEs at the DGE/EP • Database with financial the sectoral and individual levels. information on SOEs • Identification and • Analysis of financial statements of completed and updated assessment of existing the most important SOEs conducted performance contracts • Plan for the introduction of by the DGE/EP. performance contracts • Comprehensive analysis of the prepared, performance taxation of public enterprises contracts that are in place undertaken. evaluated regularly, and actions • Census and assessment concluded for improvement identified by the DGE/EP, including: • Report prepared on – Workforce and wage bill of performance monitoring of GAs SOEs; and boards of directors, – Contingent liabilities (such as including of presidents and debt guarantees); CEOs of SOEs – Arrears and cross-debts of SOEs; – Commercial bank debt of EPAs; and – SOE public service obligations. • Development of a plan to clear the most important cross-debts between SOEs and the government. • Implementation of a plan for the gradual introduction of performance contracts. Management • Definition and application • DGE/EP participates in budget • Regular contribution to the of and of responsibilities of the preparation and monitoring of preparation of the budget of follow-up on DGE/EP regarding budget budget implementation. SOEs fiscal risks estimates of SOEs and • Implementation of action plan to • Dividend policy defined and public agencies improve the application of rules in applied • Definition and adoption by the field of fiscal, financial, and • Efficient SOE budget DGE/EP of methodology accounting management (based on monitoring underway for monitoring and public finance management analysis of fiscal risks regulation and OHADA Act). • Cross-debts resolved • Monitoring of SOE • Preparation of annual report on SOE performance criteria portfolio and fiscal risk. undertaken • Initiation by DGE/EP of analysis of • Sustainability analysis of SOEs existing cross-debts of SOEs. with low financial performance • Establish clear budgetary rules undertaken creating incentives to monitor the finances of SOEs (such as deficit targets including SOEs). • Establish criteria/targets for SOE financial performance. 128 Corporate Governance and Accountability and Fiscal Risk Assessment: Republic of Niger In the 12 Months after In the 24 Months after Expected Results Three Years Area of Action Validation of the Action Plan Validation of the Action Plan after Validation of the Action Plan Transparency and Audits Transparency • Adoption, annual • Publication of annual reports, • Annual reports and audits of publication on the MoF financial statements, and 2018–19 the Commissioner for Accounts website, and SOE audits, which are then made and the CdC for all SOEs communication to the available on the MoF website. published on the websites of Commercial Court of the • Publication by the DGE/EP of an the MoF and/or the SOEs current list of SOEs annual report on the SOE portfolio themselves and related fiscal risks. • Remuneration and benefits of • Preparation and publication of a list GA presidents and members, of GA presidents and members, of board chairs and members, board chairs and members, and and of SOE managers senior managers of SOEs. published by SOE Audit • Allocation of a budget line • Follow-up by DGE/EP on audit • System put in place by for inspections and recommendations. ONECCA to ensure the quality special audits of SOEs • Strengthening of the framework of of audits and public agencies public accountants and financial • The Court of Auditors and the • Requirement that controllers and clarification of their Commercial Court are strategic EPAs be subject roles. strengthened (including through to annual audits by • Control of strategic EPAs by external a strengthening of the external auditors auditors, in collaboration with the workforce, technical support, • Inventory of SOE audits Court of Auditors. training, and technical capacity building, and hardware) • Regular discussions between the DGE/EP, auditors of the SOE, and the Court of Auditors. • Training for boards of directors and senior management of SOEs on the role of auditors and the objectives of audits. Legal Reforms Update • Compilation of all relevant • Detailed legal review of: • SOE legal framework updated, of the legal legal texts, including SOE – General SOE legislation (laws, adopted, and promulgated framework statutes, for detailed legal orders, decrees); and • SOEs’ statutes harmonized for SOEs review – SOE statutes (including to with the new legal framework identify gaps in relation to the OHADA framework and public • Legal requirements of finance regulations). transparency entered into force, including the publication • Establishment in the new legal text of complete financial of the role of the state as statements, audit reports, and shareholder and its role in financial management reports of SOEs oversight. • Definition of criteria for the creation of new SOEs, including the requirement that a study of financial viability be undertaken, and definition of the methodology and scope of the study. • Introduction of competitive recruitment procedures for general directors and senior managers of SOEs. • Reduction in the role of board chairs in the daily management of SOEs. Action Plan 129 State-owned enterprises (SOEs) play a central role in Niger’s economy, particularly in the oil and gas and min- ing sectors. SOEs also provide essential public services, such as electricity, water, and telecommunications, while parastatals are active in the education and health sectors. Many SOEs are required to fulfill public ser- vice obligations and provide goods or services at below market prices which can generate fiscal risks. These fiscal risks are compounded by SOEs’ access to debt guaranteed by the state. Prepared in close cooperation with the SOE ownership entity in Niger, the integrated SOE Framework (iSOEF) for Niger looks at the SOE landscape in the country, provides a fiscal risk assessment of the SOE sector, including a fiscal sustainability analysis covering different scenarios, and assesses SOE corporate governance practices regarding the legal framework for SOEs, ownership arrangements, performance monitoring, boards of directors, and transpar- ency and disclosure. Based on the findings of the iSOEF, a three-year, sequenced and selective action plan for Niger’s SOE reform has been developed and adopted by the Ministry of Finance.