(Recasts with Mali dam)

By Abdoulaye Massalatchi

NIAMEY, Dec 3 (Reuters) - Landlocked Niger and Mali have secured more than $400 million from mainly Islamic donors to build dams on West Africa's Niger river to generate power and help grow food for the largely desert countries, officials said.

Donors at a summit organised by the Islamic Development Bank last week in Jeddah, Saudi Arabia, pledged $236 million to build a dam in Niger, and nearly $200 million for a similar project in neighbouring Mali, the two countries' governments said.

Home to one of the world's poorest and fastest-growing populations, Niger stretches deep into the Sahara desert.

It suffers frequent hunger crises exacerbated by widespread poverty and desert encroachment onto traditional farmland, and its economy depends largely on uranium mined in the arid north by former colonial power France.

"Funding for building the Kandadji dam and associated projects has been secured," Prime Minister Seyni Oumarou said in a statement late on Sunday after returning from Jeddah.

The government has been talking about building the Kandadji dam upstream from the capital Niamey for nearly four decades, but the Islamic donor funds should allow the first phase of the huge development project to begin in mid-2008.

The Niger river, crossing the extreme southwestern corner of the country on its way to Nigeria and the Atlantic, has a fertile flood plain ripe for irrigated agriculture and potential to reduce the country's huge dependence on imported electricity.

"Building the dam will allow us to solve at least three problems: firstly regenerating the natural environment, secondly improving food security through water-based agriculture or irrigation, and thirdly to provide electricity," Oumarou said.

However, the donor funding will cover barely a third of the projected 300 billion CFA franc ($670 million) cost of the broader Kandadji project, and Oumarou said the hydropower station itself would be financed through a public-private partnership.

He said a dozen potential investors had expressed interest in the project, which would reduce Niger's dependence on neighbouring Nigeria's National Electric Power Authority, from which it imports much of its electricity needs.

Niger's economy depends heavily on uranium mined in the north, where light-skinned Tuareg nomads have rebelled against government forces this year, killing dozens of soldiers. The government dismisses the rebels as drug traffickers and bandits.

The dam site at Kandadji around 180 km (110 miles) northwest of Niamey, near Niger's borders with Mali and Burkina Faso, has not been affected by the rebellion.

Mali, whose economy is in better shape than Niger thanks to significant gold reserves and greater stability in recent years, plans to start work in 2008 on access roads and the following year on building a dam at Taoussa on the Niger river between the ancient Saharan trading cities of Timbuktu and Gao.

It too will provide hydropower and irrigation.

"In the first place, the Taoussa dam was a dream, but we have entered an era of ambition and today it is becoming a reality," President Amadou Toumani Toure said on Malian radio on Monday. (Additional reporting by Tiemoko Dially; writing by Alistair Thomson; editing by Richard Williams)

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