Niger economic policy reform program (683-0259 and 683-0263) : evaluative assessment

Interim evaluation covers the period 8/88-7/92 and includes recommendations for a planned amendment. Funds were disbursed under three tranches. The principal condition precedent (CP) for the first disbursement was elimination of tariffs and certain other taxes on agro-pastoral exports. While this was met, the Government of Niger (GON) continued to collect a "statistical tax" computed at 3% of the valeur mercuriale, ostensibly to defray its costs in obtaining essential information on exports. (Prior to the program, certain agropastoral exports had been taxed at rates as high as 20%.) Having achieved a major policy reform at the beginning of the program, USAID sought to maintain progress by requiring the GON to meet more numerous, but less significant conditions for the second and third tranches. In general, CP's for the second tranche required the GON to make specific policy decisions, and those for the third required actions to implement them. None of the later CP's had the potential impact of the tariff elimination measure, none was so well defined, and none was easily met. Above and beyond the fulfillment of CP's, several factors pertinent to future program design (including design of the amendment) have emerged. (1) Assumptions about the GON's political commitment to policy reform were overly optimistic; while reform is deemed necessary by most GON officials, the "control mentality" associated with central planning still prevails. (2) Since the criteria identified in the PAAD for measuring the impact of policy reform are likely to be influenced by a variety of economic and social factors, they should not be viewed as definitive evaluative measures of the program, but should be weighed in conjunction with other evidence. (3) The timeframe of 3 years was unrealistic. It is highly unlikely that the program could have generated in such a short time sufficient economic activity to replace the revenues lost by eliminating agro-pastoral export tariffs. (4) Policy reform alone is unlikely to persuade informal sector operators to enter the formal sector, especially since the costs of operating in the latter far exceed the benefits derived from the former. Indeed, the tendency today is to abandon the formal for the informal sector. (5) The present evaluation, conducted in the first half of 1992, is unlikely to produce conclusive evidence of the program's effectiveness. (6) In the course of the program, sharply deteriorating economic conditions have diminished the GON's ability to provide the annual baseline data called for in the grant agreement -- data necessary for undertaking a full-scale evaluation of the program. (Author abstract, modified)