The World Bank in Benin

Bordered by Togo, Nigeria, Burkina Faso, and Niger, Benin has a 121-kilometer-long coastline on the Gulf of Guinea.

Political Context

Benin is a stable democracy. Patrice Talon was reelected for a second five-year presidential term in April 2021, and the government currently enjoys an absolute majority in Parliament with 83 deputies. Political parties and movements were merged under the September 2018 party system reform and Benin now has only 12 parties compared to the previous 200.  The next legislative elections will be held on January 8, 2023.

Economic Overview 

Benin’s economy is still reliant on agriculture and on formal and informal reexport and transit trade with Nigeria.  The economy rebounded strongly in 2021, growing at an estimated 6.6%. The services and construction sectors were the main drivers of this growth. Inflation averaged 1.7% during the year and was driven by higher food prices. This situation has been compounded by the effects of the Russia-Ukraine crisis since end-February 2022, which is affecting sectors such as oil products and agricultural inputs.

The fiscal deficit (grants included) widened from 4.7% of GDP in 2020 to 5.8% in 2021, while fiscal policies have remained expansionary. Although overall revenues remained fairly resilient, response plans significantly increased government expenditure during the 2020-2021 period.

Social Context

In 2021, Benin had 12.45 million inhabitants, with a fertility rate of 5.7 children per woman (2017-18 Benin Demographic and Health Survey, BDHS) and a life expectancy of 61.2 years. The national poverty rate stood at 38.5%, while the unemployment rate was 2.4%, underemployment, 72%, and the informal employment rate, 90.1%..

In the 2018-2019 school year, only 54.8% of learners completed primary education.  Some 32.2% of children were chronically malnourished while 11% were severely malnourished (2017-18 BDHS).

A survey conducted among 1,500 households in May 2021 revealed that approximately 58% of individuals had experienced a decline in income, while 5% had no income.  

Development Challenges

The State’s firm commitment to macroeconomic stability since 2016 provided it with fiscal space to support economic activities during the pandemic.  Sustaining the recent economic recovery will be contingent on its ability to address the vulnerabilities of its growth model.  The economy is dependent on the export of unprocessed agricultural products (cotton and cashew nuts) and the reexport of imported commodities (e.g., secondhand cars and rice) to Nigeria. With almost 85% of the labor force working in the informal economy, domestic resource mobilization is among the lowest in WAEMU, despite the remarkable resilience shown during the 2020/2021 period, the result of tax policy and administrative reforms since 2016.  

In terms of risks, mounting security threats from the Sahel region could widen geographic inequalities between the rural north and the rest of the country.  The short-term outlook depends on the uncertainties related to the geopolitical context and vulnerability to the effects of climate change. The conflict in Ukraine has accelerated inflationary pressures, particularly on food, and could trigger shortages.  Benin is also vulnerable to coastal erosion and extreme climate events that could affect agricultural productivity. 

Last Updated: May 05, 2022

A National Development Plan (NDP) for the 2018-2025 period was developed to achieve the priority targets of the Sustainable Development Goals (SDGs). The new 2021-2025 Government Action Program was finalized and presented to the technical and financial partners in April 2022.

World Bank Group Engagement in Benin

The World Bank Group’s Country Partnership Framework with Benin for the 2018-2023 period, which is aligned with the government’s development plan, is structured around three focus areas:

• structural transformation of the economy to promote competitiveness and productivity
• investing in human capital
• enhancing resilience and reducing climate-related vulnerabilities.

A mid-term review launched in March 2021 was presented on March 29, 2022 during a regional operational committee meeting.

World Bank Group commitments currently stand at $1.61 billion to finance 17 national projects, and seven regional projects, financed to the tune of $371.98 million, complete this portfolio.   

In response to COVID-19, the World Bank stepped up implementation of the epidemic disease surveillance project through the Regional Disease Surveillance Systems Enhancement (REDISSE III) Project with $23 million in support. This support has (i) mobilized $10.4 million for the COVID-19 Preparedness and Response Project as part of the World Bank Group’s global emergency response; (ii) allocated roughly $10 million from the nutrition project; (iii) provided $25 million in additional financing for the Cross-Border Tourism and Competitiveness Project, as well as two additional financings ($942,857 and $30 million) for the COVID-19 Pandemic Response Project for the rollout of the national vaccination campaign. A third additional financing of $10.7 million is expected to be approved by the Board of Directors on April 20, 2022.

The International Finance Corporation (IFC) is the World Bank Group institution that focuses on the private sector in emerging countries. Its strategy is to:

• partner with financial intermediaries to improve access to finance for small and medium enterprises;
• encourage and support direct investments for enterprises in the various sectors of the economy and foster the development of public-private partnerships (PPPs);
• support the implementation of reforms designed to improve the investment climate in collaboration with the World Bank.

In November 2020, the World Bank Group conducted a diagnostic assessment of the private sector in Benin, with a view to identifying the cross-cutting and sectoral obstacles to productive investment.  This diagnostic assessment highlights the opportunities for private sector participation in development objectives, as well as the areas where a model that combines reforms and investment in public goods with advisory and technical assistance services aimed at boosting private investment can be implemented.  

Last Updated: May 05, 2022

Social protection

With World Bank assistance, the government is preparing a social safety net strengthening program to support the Ten Year Productive Social Protection Program in Benin for the period 2022-2031 (PDFPSP 2022-2031), which should become effective during the second half of 2022.  The government continues to implement the Community and Local Government Basic Social Services (ACCESS) project, which closes at the end of June 2022.

By end-March 2022, the social safety net program under ACCESS had provided unconditional cash transfers to 19,216 extremely poor households, against a target of 18,000. These cash transfers allowed recipient families to keep their children in school and thus reduce child labor among Beninese children who had previously been employed to work in agriculture in Nigeria. The project has also constructed 420 basic infrastructure facilities for 360 infrastructure-deficient communities and 77 infrastructure facilities that will serve several communities at the same time.  These include classrooms, school canteens, health centers, market facilities, and rural roads. 

The government is also implementing the Youth Inclusion Project (PRODIJ), which became effective on March 29, 2021. This operation supports the National Employment Agency (ANPE) for the rollout of the Azôli program, which targets the economic and social inclusion of young people between the ages of 15 and 30 with little or no education, according priority to girls and young people from underprivileged areas.  The Project also supports the technical and vocational training system.  Approximately 35,000 individuals will ultimately benefit from services focusing on self-employment and paid employment. A cash transfer will be provided to 6,000 vulnerable young people. The project will also support the technical and vocational education and training system by providing training in high-income generating activities to 4,000 young people through the Professional Skills Certificate program, as well as short-term training to about 12,000 young people.

Partnerships were forged with some 20 enterprises to place more than 5,000 young people in training programs and internships.

Benin is also participating in the second phase of the West Africa Unique Identification for Regional Integration and Inclusion (WURI) Program, which seeks to increase the number of persons who have government-recognized proof of unique identity that facilitates their access to services. Using an online platform developed during the COVID-19 crisis, the WURI Program, which was officially launched on November 26, 2020, has already provided 351,000 persons with their unique identification number. The project will ultimately provide, free of charge, a personal identification number certificate to the entire population, regardless of nationality, citizenship, or legal status. The WURI project will also help strengthen the national social protection system, by supporting the development of the Single Social Registry.

Agriculture

With $160 million in financing, the Agricultural Competitiveness and Export Diversification Project (PACOFIDE) was launched in October 2020 and will be implemented over a six-year period. PACOFIDE is aimed at creating an enabling policy environment to increase private sector investments in agriculture, boost productivity for targeted value chains, improve access to markets, and diversify exports. By December 30, 2021, the project had benefited 9,500 persons by supporting the establishment of 2,514 hectares of cashew plantations, the rehabilitation of 37,924 hectares of old cashew plantations, the rehabilitation of 1,200 kilometers of rural roads to facilitate market access for agricultural products, as well as the construction of a cold chain warehouse for perishable produce at the Cotonou airport. Lastly, the project implemented the partial portfolio guarantee mechanism to increase access to private financing and encourage commercial banks to provide loans to agricultural entrepreneurs.

Last Updated: May 05, 2022

The European Union, African Development Bank, United Nations agencies, bilateral donors, the World Bank Group, and the IMF are Benin’s key partners. Non-traditional creditors, such as China and the Islamic Development 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. Government–donor reviews are regularly carried out at the sector level.

Last Updated: May 05, 2022