Overview

Country Overview

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 10.9 million inhabitants as of 2015. 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.

Political Context

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. Since taking office in April 2016, the new government has resolved to promote better political and economic governance, and has plans for massive political and institutional reforms to consolidate democracy, reduce poverty, and attract investments.

Economic Overview

Real gross domestic product (GDP) growth is projected to drop to 4.6% in 2016. The GDP growth rate was 4.6% in 2012, 6.9% in 2013, and 6.5% in 2014, and decelerated to 5% in 2015, mainly due to a slowdown of re-export activities to Nigeria and a drop in agriculture production. Cotton production, which represents 5% of GDP and 27% of exports, dropped to 300,000 tons over the 2015/2016 campaign, from 400,000 tons during 2014/2015 campaign. Furthermore, the economic slowdown in Nigeria has resulted in a drop in demand for informal re-exports from Benin, both as a direct result of slower growth and indirectly as a result of a depreciating Nigerian currency (Naira). In spite of the decline in economic activities in recent months, Benin GDP’s growth was among the best in WAEMU countries during the 2011-2015 period. Inflation is estimated at 0.3% for 2015 and is projected to remain under 3% in 2016. Inflation has typically remained below the 3% WAEMU target. After peaking in December 2012 (6.8%), inflation declined to 1% in 2013 and -1.1% in 2014.

Social Context

Despite moderate GDP growth of between 4 and 5% annually over the past two decades, poverty remains widespread and on the rise in Benin, with national poverty rates of 37.5% in 2006, 35.2% in 2009, 36.2% in 2011 and 40.1% in 2015. Female-headed households experience lower levels of poverty (28% compared to 38% for male-headed households), and 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.

Development Challenges

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 to reduce poverty and promote shared prosperity. 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: Sep 28, 2016

World Bank Group Engagement in Benin

The World Bank Group’s Country Partnership Strategy (CPS) 2013-2017 for Benin is organized around three main pillars: (i) governance and public sector capacity; (ii) sustainable growth, competitiveness and employment; and (iii) access to basic social services and social inclusion. The current portfolio comprises 14 national active operations for a total commitment of $575.34 million, and is supplemented by 6 trust funds totaling $63.3 million. It covers the following sectors: budget support, urban development, community development, environment, telecommunications, youth employment, health, nutrition, capacity building, energy, and regional transport. 

International Finance Corporation (IFC)

IFC’s current strategy for Benin focuses on: (i) partnering with financial intermediaries to improve access to finance for enterprises, (ii) providing capacity-building to financial institutions to strengthen the financial sector and promote business growth, (iii) supporting the development of infrastructure to attract investments (port, electricity, telecom), and (iv) strengthening the investment climate in collaboration with the World Bank.

Multilateral Investment Guarantee Agency (MIGA):

MIGA’s current portfolio consists of three investments in the tourism, telecommunications, and services sectors, for a gross exposure of $8.5 million.

Last Updated: Sep 28, 2016

The World Bank Group has contributed to Benin’s development performance in the following sectors.

Health

The Benin Health System Performance Project ($44 million) launched in September 2011, with the goal of increasing the coverage of quality maternal, neonatal, and child health care services. It also aims to strengthen the institutional capacity of the Ministry of Health. As of March 2016, the project continues to make good progress in terms of implementation and has disbursed about 70% of its funds. The main component of this operation supports a Results-Based Financing (RBF) approach in eight of Benin’s 34 health districts. Many indicators of this operation have exceeded their targets while the rest is on track. 

Through the RBF intervention, major improvements in the quality of care have been documented in all facilities covered. The rate of antenatal care visits complying with quality standards was over 30% (baseline 5% in 2010, end target of 25%) and the availability of health workers, essential drugs, and equipment has also improved. A mixed methods survey conducted in 2015 revealed that the average availability of essential drugs in the eight districts covered reached 78%, while the average availability of essential equipment was 71% (for a target of 80%), and the availability of health workers was 86%. As for quantitative indicators, results from a recent health survey have confirmed that the RBF districts have significantly improved their performance: for instance, while the immunization rate in the country is only 40%, the RBF districts have increased this rate to 86%. To strengthen the impact of the RBF intervention on populations’ health, new and innovative interventions are being implemented, including contracting with private health facilities and communities to extend health services to more beneficiaries.

Given its success, the RBF approach has been scaled up nationally with financial support from the Global Fund to Fight AIDS, Tuberculosis and Malaria and the Global Alliance for Vaccines and Immunization. The World Bank is playing a key role in convening this harmonized support.

Agriculture

The Benin Agricultural Productivity and Diversification Project (PADA) funded by the World Bank ($31 million) and the Global Food Crisis Response Program ($15 million) launched in 2012 with the objective to help the country restore and improve productivity and selected value chains (rice, aquaculture, pineapple and cashew). As of March 2016, the total number of direct beneficiaries reached 130,376 people, of which 33% are female. The competitive funds and matching grants have supported 124 micro projects (of which 22 are led by women) that are showing interesting results across the targeted value chains. A total area of 12,184 hectares has been provided with small scale irrigation (some rehabilitated others developed). This exceeds the target value of 9,000 hectares and is having a positive impact on yield and crop production. In addition, 119 warehouses are currently under construction out of which 90 have already been completed and delivered. It should also be noted that significant actions are currently underway to provide targeted trainings which would help increase the number of beneficiaries adopting improved technologies to further boost productivity within the targeted value chains. 

Last Updated: Sep 28, 2016

The European Union, African Development Bank, United Nations agencies, bilateral donors, World Bank Group, and IMF are among Benin’s key partners. Non-traditional creditors, such as China and the Islamic Bank, are also increasingly active. Since 2004, annual joint missions of the main donors providing budget support have taken place, and together they monitor the implementation of key structural and sector reforms including aid harmonization for which a Memorandum of Understanding was signed in December 2007. At the sector level, joint government-donor reviews are regularly carried out in the core sectors of rural water, health, education, agriculture, transport, and justice. 

Last Updated: Sep 28, 2016


LENDING

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

*Amounts include IBRD and IDA commitments