Overview

  • Bordered by Togo, Nigeria, Burkina Faso, and Niger, Benin has a 121-kilometer-long coastline on the Gulf of Guinea and a population of close to 11.4 million (2018). The country has recently been carrying out key economic and structural reforms.

    Political Context

    Benin is a stable democracy. All presidential, legislative, and local elections held since the end of the Marxist-Leninist regime in 1989 have been conducted peacefully. The most recent presidential elections held in March 2016 were won by the multi-millionaire cotton tycoon, Patrice Talon. The government enjoys a comfortable majority in Parliament (61 of 82 deputies). In accordance with the party system reform approved by the National Assembly in 2018, several political parties and movements were merged to create a new charter of political parties. Benin now has around 10 State-recognized parties compared to over 200 identified parties prior to the reform. Legislative elections are due in April 2019.

    Economic Overview

    Benin's economy is heavily reliant on the informal re-export and transit trade with Nigeria (approximately 20% of GDP), and on agriculture. Growth accelerated from 5.6% in 2017 to 6% in 2018 (3.1% per capita GDP), driven by vibrant port activity and a sound agricultural sector buoyed by record cotton production and the emerging diversification of sectors. Growth was also driven by an increase in public investments (particularly infrastructure) and the performance of the service sector. The inflation rate quickened to 2.3% in 2018 (versus 0.1% in 2017 and -0.8% in 2016), owing primarily to rising food prices. Thanks to higher agricultural exports, the current account deficit improved slightly, narrowing from 9.9% of GDP in 2017 to 8.9% of GDP in 2018.  Wage bill and interest payment increases (+0.2% of GDP each) were more than offset by the reduction in current transfers (-0.2% of GDP), expenditures in goods and services (-0.3% of GDP), and investment spending (-0.1% of GDP). As a result, the primary deficit narrowed from 5% of GDP in 2017 to 3.4% of GDP in 2018, while the overall fiscal deficit (commitment basis, including grants) fell from 5.9% of GDP to 4.7% of GDP. However, an increase in domestic debt led to a concomitant rise in the debt-to-GDP ratio from 54.2% in 2017 to 54.4% in 2018.

    Social Context

    Despite steady, robust economic growth over the past two decades, poverty remains widespread owing to limited growth in per capita terms (only 1.6% during 2006–2016). National headcount poverty rates were estimated at 40.1% in 2015. Female-headed households experience lower levels of poverty (28% compared to 38% for male-headed ones), but generally women suffer from a lack of economic opportunity and are under-represented in high-level decision-making positions.  The education and health sectors account for a significant share of public expenditure (23% and 7%, respectively, on average). Greater public spending efficiency and a more equitable geographical distribution of resources would pave the way for lower poverty rates and more inclusive growth.

    Development Challenges

    Benin is vulnerable to exogenous shocks: adverse weather conditions, varying terms of trade (cotton and oil prices), and developments in Nigeria—its main trading partner and the main source of its economic activity as 80% of Benin’s imports are destined for Nigeria.  The economic recovery in Nigeria, where the recession officially ended in September 2017, fueled growth in Benin.

    Despite some progress in the formal sector, Benin’s weak business environment continues to deter domestic and international investors.  In the World Bank’s Doing Business indicators, Benin has ranked poorly (153 out of 190 countries in 2019), but has recently made progress in “starting a business” and “getting electricity.” Benin must, however, do more in the areas of “getting credit” and “paying taxes.” Lastly, despite strides made, Benin continues to grapple with major corruption-related challenges, ranking 85th out of 185 countries on Transparency International's Corruption Perceptions Index for 2018.

    Last Updated: Mar 22, 2019

  • In December 2016, the new government adopted the Government Action Program [Programme d'actions du gouvernment PAG], a development plan structured around 45 flagship projects aimed at improving productivity and living conditions.

    World Bank Group Engagement in Gabon

    The World Bank’s Country Partnership Framework with Benin, which is aligned with the government’s development plan, covers the period 2018-2023 and is organized around three main focus areas:

    • structural transformation for competitiveness and productivity;
    • investing in human capital;
    • enhancing resilience and reducing climate-related vulnerabilities.

    World Bank Group commitments currently stand at $680.93 million for the financing of 11 national projects.  A trust fund valued at $300,000 and six regional projects financed to the tune of $202 million complete this portfolio.

    These projects cover the following sectors: budget support, tourism, urban development, water, community development and social protection, environment, agriculture, youth employment, health, nutrition, capacity building, energy, and regional transport.  Other projects include the digital rural transformation project, the early childhood development project, the agricultural competitiveness project, the classified forest protection project, and the stormwater management project.

    The strategy of the International Finance Corporation (IFC), the private sector arm of the World Bank Group, focuses on:

    • partnering with financial intermediaries to improve access to finance for enterprises;
    • providing capacity building to financial institutions to strengthen this sector and promote business growth;
    • supporting the development of infrastructure to attract investments (ports, electricity, and telecommunications);
    • strengthening the investment climate in collaboration with the World Bank; and scaling up rural access to water under a Public Private Partnership (PPP) while building local capacity in this sector.

    Multilateral Investment Guarantee Agency (MIGA)

    MIGA has three investments, in tourism, telecommunications, and services, for a gross exposure of $8.5 million.

    Last Updated: Mar 22, 2019

  • Social Safety Nets

    The Bank financed a social safety net pilot aimed at combating child labor. Monthly allocations of CFAF 3,500 (about $6) helped families send children to school, reducing trafficking by parents sending their children to work in nearby Nigeria as agricultural laborers.  These allocations also helped with income-generating activities. The program provided $4 million in regular cash transfers to over 13,000 poor households in 125 villages.  With a total of $76 million, the first phase of the program covered all 77 communes in Benin.  Upon closing in December 2017, it had implemented nearly 1,300 community and 240 commune-level sub-projects that included repairs to classrooms, potable water points, health centers, and market infrastructure, directly benefiting more than 300,000 beneficiaries, of whom 48% were women.

    The new Community and Local Government Social Services Project (ACCESS), launched in January 2019, will continue the safety net program with the aim of providing assistance to 18,000 new households by 2022.

    Agriculture

    Launched in 2012, the Benin Agricultural Productivity and Diversification Project (PADA), funded by the World Bank ($31 million) and the Global Food Crisis Response Program ($15 million), has helped restore and improve on the productivity of selected value chains of products—such as rice, aquaculture, pineapples, and cashews—and increased their value added. Additional financing of $45 million was allocated to it in 2017. As of March 2018, the total number of direct beneficiaries had reached 180,200 against a target of 250,000 beneficiaries by the end of the project in 2021.  About 37% are women, against an end target of 40%.

    Competitive funds and matching grants have supported 124 micro-projects (22 led by women); these projects are yielding positive results across the value chains.  A total area of 11,728 hectares was provided with small-scale irrigation and drainage, against an end target of 12,678 hectares, which is having a positive impact on yields. Some 119 warehouses are under construction, with 90 completed.

    The project has supported professional bodies working in cashews and pineapples, putting producers, processors, and other stakeholders in a better position to influence policy decisions at higher levels.

    Last Updated: Mar 22, 2019

  • The European Union, African Development Bank, United Nations agencies, bilateral donors, the World Bank Group, and the IMF are Benin’s key partners.  Non-traditional creditors, such as China and the Islamic Development Bank, are also increasingly active.  Since 2004, annual joint missions of the main donors have taken place.  Together they monitor the implementation of structural and sector reforms.  At sector level, government–donor reviews are regularly carried out. 

    Last Updated: Mar 22, 2019

Api


LENDING

Benin: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments

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Additional Resources

Country Office Contacts

Main Office Contact
Banque Mondiale
B.P. 03-2112
Cotonou, Bénin
+229-21-30-5857
For general information and inquiries
Yao Gnona Afangbedji
Consultant
+229-21-30-5857
yafangbedji@worldbank.org
For project-related issues and complaints
beninalert@worldbank.org