West African regional bloc ECOWAS has agreed to lend Niger 5 billion CFA francs ($11.33 million) to help fund a road project, state media said late on Tuesday, a week after the organisation suspended Niger over flawed polls.

The agreement was signed between the ECOWAS Bank for Investment and Development (EBID) and the uranium-producing nation on Tuesday. The West African Development Bank is lending Niger 8 billion CFA for the same project.

ECOWAS suspended Niger after President Mamadou Tandja held parliamentary elections this month, after winning a divisive August referendum on extending his time in power by three years after his second term ends in December.

Niger shrugged off the suspension, saying the region had misunderstood the political situation. Analysts have questioned the impact of sanctions when the government has already proved that it can lure billions of dollars of foreign investment into its uranium mining and oil sectors. By injecting 5 billion CFA in this project, the EBID is simply showing that Niger is indeed a full member of ECOWAS and that the normalisation of relations between the two parties is just a question of time, Aboulaye Coulibaly, spokesman for Niger's economy and finance minister, was quoted as saying.

ECOWAS, which has said that constitutional legality must be reinstated before it will lift its suspension, was not immediately available for comment.

The loan will be used to improve a stretch of road linking Niger to Benin, to the south, state media reported.

Retired army colonel Tandja defied international and domestic criticism to hold the referendum, which also boosts his own powers and removes presidential term limits.

He says he needs more time in power to work on large infrastructure projects, including completion of a 1.2 billion euro uranium mine with French mining giant Areva and a $5 billion Chinese oil project.

Critics accuse him of abuse of power and say he risks turning Niger into a pariah state. The European Union has delayed some aid payments.

Niger