Benin is bordered by Togo to the west, Nigeria to the east, and Burkina Faso and Niger to the north. As of 2015, it had an estimated population of 10.9 million. With the support of its partners, Benin has been able to undertake important economic and structural reforms.
Benin enjoys a stable and democratic government. Since the end of a 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. In December 2016, the new government adopted an ambitious development program called “Programme d’Actions du Gouvernement” structured around 45 flagship projects aimed at improving the productivity and living conditions of the population.
President Talon also put forward as one of his campaign topics the reform of Benin’s political model. However, his proposals to revise the 27-year old constitution were rejected by parliament in April 2017. The proposed changes included the introduction of an independent Auditor General’s Office; a new method of appointing members to the Constitutional Court; the simplification of procedures in the High Court of Justice; and a revamping of political party funding. After the rejection of his proposed reforms, Talon told reporters he had also abandoned his plans to limit occupancy of the presidential office to one term. Asked whether he would be candidate for Benin’s 2021 presidential elections, he responded: “I will advise”.
Benin’s economy relies heavily on informal re-export and transit trade with Nigeria, which makes up roughly 20% of GDP, and on agricultural production. The tertiary sector as a whole accounts for 50% of GDP, while agriculture accounts for approximately 25% of GDP and between 45% and 55% of the country's employment. The economy is characterized by a high degree of informality, which represents an estimated 65% of the total economy and employs over 90% of the labor force. Real GDP growth is projected to accelerate to 5.4% in 2017, from 4.0% in 2016. Growth has been relatively significant in recent years at 4.8% in 2012, 7.2% in 2013, and 6.4% in 2014, but decelerated to 2.1% in 2015, mainly due to a slowdown of re-export activities and a drop in agriculture production.
Cotton production reached approximately 347,000 tons in 2016 from 269,218 tons in 2015, and is expected to increase by 8.1% in 2017. Industrial production growth will accelerate to 7.2% in 2017, from 4.2% in 2016. The sector will benefit from cotton ginning activities, as well as the dynamism in the construction sub-sector linked to the implementation of the government investment plan. Inflation is estimated at -0.8% for 2016 and is projected to remain under 3% in 2017. It has typically remained below the WAEMU target of 3.0%.
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), but 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. Low oil prices and resultant lower growth in Nigeria will have an indirect effect on Benin. About 80% of Benin’s imports are destined for Nigeria via informal cross-border trade. This re-export trade accounts for 25% of government revenue. As a result, events in Nigeria can have considerable impact in Benin and create uncertainty around its fiscal space.
The government needs to accelerate reforms to reduce poverty and promote shared prosperity. In particular, despite some progress, a weak business environment continues to be a deterrent for domestic and international investors. Benin's Doing Business indicators have moderately improved in 2016. According to the recent Doing Business Report, Benin improved its ranking by three places moving from 158th in 2015 to 155th ranking in 2016. These improvements reflect progress on starting a business as well as on resolving insolvency. However, more needs to be done to improve access to electricity, tax payments, and access to credit.
In addition, Benin continues to face major corruption challenges, and is ranked 95th out of 175 countries in the Transparency International’s 2016 Corruption Perceptions Index (it was ranked 80th and 83rd in 2015).
Last Updated: Apr 19, 2017