The West African nation of 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 million inhabitants as of 2011. With the support of the International Monetary Fund (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. Legislative and local elections are due respectively in April and May 2015, and presidential elections are slated for 2016.
Real GDP grew by 5.4% in 2012, 5.6% in 2013, and an estimated 5.7% in 2014 - a sharp increase from the previous five-year average of 3.7%. Growth has been primarily driven by trade and agriculture. Continued improvements at the port of Cotonou have increased traffic and boosted efficiency, while favorable weather conditions have strengthened agricultural output. Cotton production was 240,000 tons in 2012/13, 307,000 tons in 2013/14 and is estimated at 350,000 tons for the 2014/15 season. On the demand side, investment increased sharply in 2013, spurred by a rise in oil exploration. However, this has had little impact on the demand for domestically produced goods.
Benin’s fiscal stance remains stable, and the overall fiscal deficit is estimated at 3.1% of GDP in 2014 (cash basis, excluding grants), following 3.7% in 2013 and 2.4% in 2012. Customs revenues slightly underperformed over 2014 as have domestic tax revenues. This was due to a drop in informal re-exports to Nigeria. Thanks to prudent fiscal policy, the overall budget deficit and balance of payments deficit remain at acceptable levels, and sovereign debt continues below 30% of GDP. Inflation was moderate at about 1% in 2013, thanks in large part to low food price inflation. On May 23, 2014, the Executive Board of IMF completed the sixth and last review of Benin’s economic performance under a program supported by the Extended Credit Facility (ECF) arrangement. The government has requested a new three-year facility from the IMF.
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 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, improved agricultural productivity, and an improved business environment will be key to taking greater advantage of Benin’s geographic position as a gateway to the Nigerian market and 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 past 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 in 2015 without increased 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 on Financing Benin’s Development, 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: Apr 02, 2015