Benin is bordered by Togo to the west, Nigeria to the east, and Burkina Faso and Niger to the north. It has an estimated population of 10.6 million inhabitants as of 2014. With the support of its partners, Benin has been able to make important economic and structural reforms and sustain its economic growth rates over the last decade.
Benin continues to enjoy a stable and democratic government. Since the end of the Marxist-Leninist regime in 1989, it has organized six presidential elections, seven legislative elections and three local elections peacefully. Presidential elections held in March 2016 were won by the multi-millionaire and cotton sector tycoon, Patrice Talon. Elected as new president of Benin, he will succeed Thomas Boni Yayi, whose second term will end in April 2016. Legislative and local elections were held respectively in April and June 2015.
Real GDP growth is projected at 5.5 to 6% in 2016. Growth in 2012 was 5%, and steadily increased to 7% percent in 2013, before decelerating in 2014 to 6.5% and then to back to 5% in 2015, mainly due to a slowdown of re-export activities to Nigeria and a drop in agriculture production.
Increasing cotton production, which reached approximately 400,000 tons in 2014 and 2015 (up from 240,000 tons in 2012 and 2013), strong activity at the Port of Cotonou, and rising telecommunications and transport sector activity have supported this improved performance. In spite of the slight decline in economic activities in recent months, Benin GDP’s growth was one of the best among the West African Economic and Monetary Union (WAEMU) countries in 2015. Inflation is estimated at -0.5% for 2015 and is projected to remain under 3% in 2016. This has typically remained below the WAEMU target of 3%, and stems from the fact that Benin sources over 85% of its petroleum products from Nigeria through unofficial channels. The country’s fiscal deficit, which increased considerably in 2015 as the result of higher public investments and lower than targeted public revenues, should remain under control at 6% in 2016.
Poverty remains widespread in Benin, with national poverty rates of 37.5% in 2006, 35% in 2009 and 36% in 2011. Female-headed households experience lower levels of poverty (28% compared to 38% for male-headed households), though women remain more vulnerable and continue to suffer from a lack of economic opportunities. Women are also underrepresented in high-level decision making positions. The education and health sectors continue to represent a significant share of annual public expenditure (on average 23% of public expenditure is allocated to education and 7% to the health sector). Significant efforts are needed to ensure more equity in the geographical distribution of resources and greater effectiveness and efficiency in the management of these two sectors.
Benin is vulnerable to exogenous shocks, primarily: adverse weather conditions, terms of trade shocks (cotton and oil prices), and developments in Nigeria. The outlook for 2016 is clouded by the impact of declining global oil prices, which will be felt largely indirectly through Nigeria, as reduced growth there will affect Benin. Benin is also sensitive to Nigeria’s trade policy decisions, as 80% of Benin’s imports are destined there via informal cross-border trade. Other vulnerability risks to Benin include the contingent liabilities that comes with the government’s continuing control of the cotton sector.
The government needs to accelerate reforms in order to access the $12 billion pledges made during the June 2014 Consultative Group in Paris. To guard against debt distress, financing plans for scaling up investments will need to be highly concessional. The country also needs a regulatory framework to attract public-private partnerships. The priority axes of reforms identified by the 2015 public expenditure management and financial assessment report include improvement of internal revenue collection, restructuring the financial control system, improving the governance for autonomous public institutions, and enhancing the accounting and budget information systems.
Last Updated: Apr 13, 2016