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Cablegate: Encouraging Niger Budget Transparency

VZCZCXRO1649
RR RUEHLMC
DE RUEHNM #0869/01 3101717
ZNR UUUUU ZZH
R 061717Z NOV 09
FM AMEMBASSY NIAMEY
TO RUEHC/SECSTATE WASHDC 5437
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHAR/AMEMBASSY ACCRA 0521
RUEHFR/AMEMBASSY PARIS 0870
RUEHLMC/MCC WASHDC

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

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