Benin’s geographical position at the juncture of two major regional corridors—the Abidjan-Lagos and Cotonou-Niamey corridors— makes this West African country an important commercial and tourism hub. Benin has a 121-kilometer-long coastline on the Gulf of Guinea and is bordered by Nigeria, Burkina Faso, Niger, and Togo.
Political Context
Benin is a politically stable country and has achieved successive democratic transitions. On January 8, 2023, the parties supporting President Patrice Talon won the legislative elections, securing 81 of the 109 parliamentary seats in the National Assembly. The Democrats, the main opposition party that remains closely linked to former president Yayi Boni, won 28 seats, marking the opposition’s return to parliament after a four-year absence. Political parties and movements were merged under the September 2018 party system reform, while others were unable to present candidates for the legislative elections.
Social Context
In 2022, Benin had a population of 13.35 million, with a fertility rate of 5.7 children per woman and a life expectancy of 61.2 years. In 2019, the national poverty rate stood at 38.5%, while the unemployment rate was 2.4%, underemployment, 72%, and the informal employment rate, 90.1%.
The country’s ranking on the United Nations Human Development Index (HDI) remains low, although it has improved over time. In 2020, Benin was ranked 166th out of 191 countries with an HDI of 0.525, as a result of its low life expectancy at birth (59.8 years) and low expected and average years of schooling (10.8 years and 4.4 years, respectively). Similarly, although progress has been made in education and health, Benin’s 2020 Human Capital Index score remains low.
Several global and regional socioeconomic shocks could affect poverty reduction trends. The effects of the COVID-19 pandemic, the impact of WAEMU sanctions against neighboring Niger, the fallout from the Russian invasion of Ukraine, political instability in neighboring Sahel countries, growing insecurity, and social tensions in the North could lead to continued volatility in the price of food, energy, and fertilizers, which would in turn adversely affect poor and vulnerable households, thereby slowing poverty reduction and pushing more households into situations of fragility.
Economic Overview
After rebounding strongly in 2021 to 7.2%, growth slowed slightly to 6.3% in 2022. However, following a robust performance in the first half of 2023, the Beninese economy is now grappling with external shocks related to the closure of borders with Niger and to the rise in gas prices in the wake of reforms implemented in Nigeria in May 2023. Year-on-year inflation stood at 3.9% in July 2023.
Fiscal policy remained expansionary in 2022 for a third consecutive year, with a deficit that narrowed slightly but remained high at 5.5% of GDP for 2022, compared to 5.7% in 2021. The gradual increase in tax revenues under the domestic resource mobilization strategy will help reduce the public deficit starting in 2023, with a view to achievement of the regional convergence criterion of 3% of GDP by 2025. While the risk of debt distress is still deemed moderate, public debt has risen sharply, from 41.2% of GDP in 2019 to 54.1% in 2022, an increase of 12.9 percentage points of GDP over three years.
Development Challenges
The State’s firm commitment to macroeconomic stability since 2016 provided fiscal space to support economic activities during the pandemic. Sustaining the economic recovery will be contingent on its ability to address the vulnerabilities of its growth model. The economy is dependent on the export of unprocessed agricultural products (cotton and cashew nuts) and the reexport of imported goods and commodities (e.g., secondhand cars and rice) to Nigeria. Almost 85% of the labor force works in the informal economy. Benin has one of the lowest domestic resource mobilization levels in WAEMU, despite steady progress since 2020. The short-term outlook is shaped by uncertainties associated with the geopolitical context, especially in the North, as well as by unrest in neighboring countries.
Last Updated: Sep 29, 2023