Benin is located in West Africa, with a population estimated at about 10 million in 2011. With the support of the IMF and the World Bank, Benin has been able to make important economic and structural reforms and sustain its economic growth rates over the last decade. Nevertheless, poverty is still widespread and the economy remains undiversified and vulnerable to external shocks.
Benin continues to enjoy a stable and democratic government. Since the end of the Marxist-Leninist regime in 1989, it has organized four presidential elections and four legislative elections peacefully. Current president, Yayi Boni, is fulfilling a second five-year term which ends in 2016. The next legislatives and presidential elections are due in 2015 and 2016 respectively. The country’s third municipal elections, which were due in March 2013, have been postponed several times, mainly because opposition parties are contesting the electoral list which was used for the 2011 presidential elections. No new dates have been set for these yet.
Benin has made substantial progress over the past decade in reinforcing macroeconomic stability, which has laid the foundation for modest but accelerating growth. After averaging less than 3.7% from 2007-2011, GDP growth rose to 5.4% in 2012 and reached 5.6 % in 2013.
Growth is expected to remain strong at 5.5% in 2014. Benin’s enhanced growth performance has been supported by ongoing efficiency improvements at the Port of Cotonou, a vital regional trade hub, which have boosted traffic and cut marginal shipping costs. These developments have been complemented by stronger cotton and non-cotton agricultural production, which have been bolstered by favorable weather conditions and relatively effective management of recent cotton campaigns.
Unfortunately, recent economic growth has been insufficient to meaningfully reduce poverty due to a combination of distributional inequality and a rapidly expanding population. While Benin’s poorest households have experienced marginal welfare improvements, including reductions in both the depth and severity of extreme poverty, recent growth has had little impact on poverty rates.
The national poverty headcount rate fell only slightly from 37.5% in 2006 to 36.2% in 2011, while poverty measured by the international standard of $1.25 per day remains pervasive at 50.9%. The weak connectivity between macroeconomic growth and poverty reduction arises largely from the very modest growth of per capita income. In addition, the highly informal nature of the economy, low and declining productivity, particularly in agriculture, and a lack of economic diversification all contribute to the persistence of poverty in Benin.
The third Growth and Poverty Reduction Strategy (2011-2015) adopted by the Government in 2011 is currently under implementation. Benin aims to become an emerging economy by 2025 through increasing sustainable growth over the medium-term and making progress towards the Millennium Development Goals (MDGs). Increasing economic growth and raising per capita GDP will require that Benin increasingly capitalize on its comparative advantages in agriculture and its position as a regional trading center. Agricultural diversification and improved agricultural productivity will be key, as will an improved business environment in order to take greater advantage of Benin’s geographic position in serving the Nigerian market and its role as a gateway to land-locked countries to its north.
Despite progress in improving access to basic services, achieving the Millennium Development Goals (MDGs) remains a significant challenge. Benin is on track to meet the MDGs for access to potable water in rural areas, eradicating hunger, and reduced HIV/AIDS prevalence. Attaining the rest of the MDGs will be difficult, however, without a sharp acceleration of the current trends. In the health sector in particular, child and maternal mortality remain very high despite a reduction over the last years.
In education, the universal primary education goal and the goal completion rate for boys are likely to be reached, but the 2005 goal of parity in primary and secondary education has not been met and will not be reached by 2015 without redoubled efforts. Furthermore, improving the quality of education and the management of the sector remain key challenges. Finally, while Benin is in a position to meet the MDG for rural water supply, reaching the sanitation goal remains challenging, even with sustained actions.
At the Consultative Group meeting organized by the government in Paris in June 2014, donors and private investors pledged a record $10.4 billion (against a funding gap of $6.7 billion) to support the country’s development priorities. A strategic guidance mechanism has been put in place to oversee the transformation of these pledges into structuring investments.
Last Updated: Nov 25, 2014