Overview

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Context
Strategy
Results
Partners

Benin has a short (121 kilometers or 75 miles) coastline on the Gulf of Guinea, and is otherwise bordered by Togo to the west, Nigeria to the east, and Burkina Faso and Niger to the north. It has a population of at least 10.9 million (2016). Benin has recently been carrying out key economic and structural reforms.
Political Context
Benin has a democratic government and political stability. Since the end of a Marxist-Leninist regime in 1989, it has organized six presidential, seven legislative, 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, his new government adopted a Programme d’Actions du Gouvernement (PAG), which is structured around 45 flagship projects aimed at improving productivity and living conditions. A comfortable majority in Parliament (61 deputies out of 82) is supportive of government reforms. Legislative elections are due in 2019.
Economic Overview
Benin’s economy relies heavily on its informal re-export and transit trade with Nigeria, which makes up roughly 20% of its GDP, and on agriculture. GDP growth accelerated from 4.0% in 2016 to 5.6% in 2017 (2.7% per capita), driven by a vibrant agricultural sector buoyed by record cotton production, an increase in public investment (particularly infrastructure), and the strong performance of the service sector due to economic recovery in Nigeria. Inflation turned positive and averaged 0.1 % in 2017 (versus -0.8 % in 2016) due to rising oil and food prices. The current account deficit widened—from 9% in 2016 to 11.00 % in 2017—due to the impact of infrastructure and energy-related imports. Exports increased faster than GDP but at a slower pace than imports. The primary deficit narrowed from 4.8% of GDP in 2016 to 3.9% in 2017. However, the overall fiscal deficit fell only slightly—from to 6.0% of GDP in 2016 to 5.9% in 2017—because of the burden of higher interest.
Social Context
Despite moderate GDP growth of 4% to 5% a year over the past two decades, poverty remains widespread due to limited growth in per capita terms (of 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) 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 take up a significant share of public expenditure (an average of 23% is allocated to education and 7% to health). But more equity is needed in its geographical distribution, as well as greater effectiveness and efficiency in the management of these two sectors.
Development Challenges
Benin is vulnerable to exogenous shocks: adverse weather conditions, terms of trade (cotton and oil prices), and developments in Nigeria—its main trading partner and the main source of its economic activity as, typically, 80% of Benin’s imports are destined for Nigeria. Technically speaking, as Nigeria made its way out of recession in September 2017, growth in its economic activities also drove up growth in Benin’s.
Despite some progress in the more formal sector, though, 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.” More needs to be done by it to improve access to credit and tax payments in Benin, and corruption continues, with Benin ranking 95 of 175 countries in Transparency International’s 2016 Corruption Perceptions Index (it was ranked 83 in 2015).

Last Updated: Nov 16, 2018
The World Bank Group’s Country Partnership Framework (CPF 2018–2023) is organized around three main focus areas:
structural transformation for competitiveness and productivity;
investing in human capital;
increasing resilience and reducing climate-related vulnerabilities
The portfolio consists of 12 active operations worth a total commitment of $735.31 million, and is supplemented by two trust funds ($11.83 million) and four regional projects ($103 million). It covers the following sectors: budget support, urban development, water, community development and social protection, environment, telecommunications, youth employment, health, nutrition, capacity building, energy, and regional transport.
International Finance Corporation (IFC)
The IFC’s 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 sector and promote business growth; (iii) supporting the development of infrastructure to attract investments (to the port, electricity, telecom); (iv) strengthening the investment climate (in collaboration with the World Bank); and (v) scaling up rural access to water under a Public Private Partnership (PPP) and building up local capacity to advise it.
Multilateral Investment Guarantee Agency (MIGA)
MIGA’s portfolio consists of three investments: in tourism, telecommunications, and services, for a gross exposure of $8.5 million.

Last Updated: Nov 16, 2018
Cash Transfers are Positively Transforming Poor Communities
A Bank-financed, social safety net pilot brought about positive change in beneficiary households in communities serving as a source of child labor. Monthly allocations of CFAF 3,500 (about $6) helped families send children to school instead, reducing trafficking by parents sending their children to work in nearby Nigeria, mostly as agricultural labor. 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 48.18% were women.
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 augmented their value addition. 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 February 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 are showing interesting 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. This 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: Nov 16, 2018
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 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: Nov 16, 2018