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 at least 10.9 million (2016). Benin has enacted important economic and structural reforms.

Political Context

Benin has 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 a  Programme d’Actions du Gouvernement (PAG) structured around 45 flagship projects aimed at improving productivity and living conditions. President Talon’s proposals to reform Benin’s political model, however, were rejected by parliament in April 2017. These 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 revamping political party funding. Although the socio-political atmosphere remains largely favorable and conducive for reform, economic expectations are high, and there is pressure to reduce high youth unemployment, address poor living standards, accelerate economic growth, and improve the quality of public services.

Economic Overview

Benin’s economy relies heavily on its informal re-export and transit trade to Nigeria, which makes up roughly 20 percent of GDP, and on agriculture. The tertiary sector as a whole accounts for 50 percent of GDP, while agriculture accounts for about 25 percent of GDP and 45 to 55 percent of employment. The economy is characterized by informality, representing an estimated 65 percent of the total economy and over 90 percent of the labor force.

Real GDP growth accelerated from 2.1 percent in 2015 to 4 percent in 2016 and 5.6 percent in 2017, and is expected to reach 6.0 percent in 2018, overcoming the low-growth that resulted from a drop in demand in Nigeria. Cotton production, 5 to 7 percent of GDP and about 27 percent of exports, hit about 451,000 tons in 2016—a 73 percent increase from 2015. The government expected an increase of 11 percent for 2017. Industrial production accelerated at 7.2 percent in 2017, up from 4.5 percent in 2016. The sector will benefit from cotton ginning and dynamism in the construction sub-sector linked to the implementation of a government investment plan. Inflation is estimated at 0.6 percent for 2017 and projected to remain under the West Africa Economic Market Union’s target of 3 percent for 2018. With the partial implementation of the PAG, Benin’s overall fiscal deficit (including grants) was 6.1 percent of GDP in 2017 against a projected 7.9 percent, thanks to the strong performance of domestic revenue. It may shrink to 4.1 percent and 1.9 percent of GDP in 2018 and 2019 respectively.

Social Context

Despite moderate GDP growth of 4 to 5 percent annually over the past two decades, poverty is often on the rise. National poverty rates were 37.5 percent in 2006, 35.2 percent in 2009, 36.2 percent in 2011, and 40.1 percent in 2015. Female-headed households experience lower levels of poverty (28 percent compared to 38 percent for male-headed households), but women suffer from a lack of economic opportunities and are underrepresented in high-level decision-making positions. The education and health sectors take a significant share of public expenditure (on average 23 percent is allocated to education and 7 percent to health). More equity is needed in their geographical distribution, as well as 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 (cotton and oil prices), and developments in Nigeria, its main trading partner and source of its economic activity, as 80 percent of Benin’s imports are typically destined for Nigeria. Nigeria technically exited recession in September 2017, and growth in its economic activities might also drive growth in Benin. Despite some progress, a weak business environment continues to deter domestic and international investors. In Doing Business indicators, Benin ranked 153 in 2016 and 155 in 2017, but made progress in “starting a business” and “getting electricity.” More needs to be done to improve access to credit and tax payments, and Benin continues to face major corruption, ranking 95 out of 175 countries in the Transparency International’s 2016 Corruption Perceptions Index (it was ranked 83 in 2015). 

Last Updated: Apr 24, 2018