ENCOURAGING NIGER BUDGET TRANSPARENCY

UNCLAS SECTION 01 OF 02 NIAMEY 000869 DEPT FOR EBB/IFD/OMA - B SAUNDERS; PLS PASS USAID/AFR/W ACCRA FOR USAID/WA PARIS FOR AF WATCHER SIPDIS E.O. 12958: N/A TAGS: EAID ECON EFIN PGOV PREL KMCA NG SUBJECT: ENCOURAGING NIGER BUDGET TRANSPARENCY REF: A) State 81177, B) Niamey 00221 ¶1. Ambassador delivered to the Government of Niger (GON) Foreign Minister ref A demarche encouraging central government budget transparency as requested. FM responded that the GON continues to work on improving transparency and that she will share the contents of the demarche with the Minister of Finance. ¶2. Per ref B, the Ministry of Finance publishes Niger's budget and copies are available to the public at minor cost. The published budget, however, is not comprehensive, and significant areas of public income and spending remain undisclosed. Insufficient budget transparency fuels speculation about corruption and misuse of public resources. Both international donors and civil society organizations are taking steps to promote greater transparency. An update on recent activities follows. Civil Society -------------- ¶3. On July 13-15, 2009, the Network of Organizations for Transparency and Budgetary Analysis (ROTAB),a local network of anti-corruption organizations, held a forum on extractive industries in Niger. The Forum was funded and co-sponsored by two international organizations, Publish What You Pay and Revenue Watch Institute; participants included representatives of government institutions, including Customs and Taxation, representatives of mining companies, international organizations, and embassies. Improving budget transparency of mining revenues was a major focus of discussion, and the conference received wide media coverage. Although the topic of this forum was extractive industries, and the sponsoring organizations are among the civil society partners in the Extractive Industries Transparency Initiative (EITI) Niger, the EITI Niger Secretariat was not represented at the forum. ¶4. Niger remains engaged as an EITI candidate country, but progress towards meeting the March 2010 deadline for compliance has been very slow. Only three mining companies are currently participating in EITI, and there has been no transparency at all regarding the Chinese investments in petroleum and uranium projects. EITI Niger activities were suspended from August 20 - September 28, 2009 because civil society participants withdrew from the process until the GON provided guarantees of their safety and security during a period of political unrest. (Comment: There are only a small number of civil society activists in Niger, and the leaders of anti-corruption organizations are also leaders in pro-democracy activities. End comment.) ¶5. On October 25, a local association called Citizens Alternatives together with the National Customs Trade Union sponsored a roundtable on "Transparency of Budget Processes." Participants based their discussions on the results of the 2008 Open Budget Index developed by civil society participants through the International Budget Partnership (IBP). According to this index, Niger provides only minimal information about public spending, and roundtable participants pointed out that the public is not provided with accurate information on large projects or on flows of international assistance. The roundtable was the subject of an analytical article in the independent newspaper "Le Republicain." ¶6. On November 4, the Niger chapter of Transparency International (TI) held a public meeting to initiate a study on Systems of National Integrity in Niger. This study will use a standard TI format to evaluate both law and actual practice as a way of building public awareness and focusing public discussion on corruption and governance issues in Niger. Donor Efforts to Increase Transparency -------------- ¶7. On October 15, the World Bank and the Minister of Finance signed a new USD 10 million agreement to improve central government administration in Niger. Project documents noted "inadequate budget preparation, execution, internal controls, and misalignment with the country's (development) goals." The project further noted that "Social accountability is still perceived to be low as mechanisms of checks and balances including civil society organizations, media and other mechanisms that strive to develop and become more effective." Although the project focus is on internal information systems and information sharing within the Ministry of Finance, greater budget transparency is an integral element that would facilitate public information. Activities Disrupted by Political Turmoil -------------- ¶8. Fragile systems of political accountability were shaken by President Tandja's decision to extend his mandate beyond constitutional limits. In his rush to consolidate authority through NIAMEY 00000869 002 OF 002 the August 4 referendum on a new constitution, President Tandja dissolved the National Assembly and dismissed the Constitutional Court. The regime's selective use of corruption charges to discredit the National Assembly and harass political opponents has not enhanced legitimate anti-corruption efforts. ¶9. Recent political events led to the suspension of a successful project sponsored by the U.S. Department of Treasury's Office of Technical Assistance. The OTA project worked directly with the Ministry of Finance Department of Taxation to increase tax receipts. The OTA project consultant on taxation of extractive industries initiated interagency cooperation between the tax authorities and the ministry of mining to insure availability of accurate statistics on production. OTA project consultants provided training on auditing large companies, including state owned firms with large tax arrears. The May 2009 IMF Country Report noted that 2008 "Tax revenue exceeded program targets by 0.9 percent of GDP, reaching 11.8 percent of GDP because of strong performance of custom duties, company profit taxes and the VAT." (Comment: The success of this project demonstrates that many public employees are motivated to improve public financial management when they are supported by more effective systems and the necessary political will. End comment.) ¶10. Governance activities funded through the Millennium Challenge Account (MCA) Threshold Program have also been suspended in response to political events. The MCA program in Niger included a range of anti-corruption activities and employed a number of progressive-minded Nigeriens. Without a prompt return to democratic processes, Niger will lose the benefits of this program. ALLEN