Benin is bordered by Togo to the west, Nigeria to the east, and Burkina Faso and Niger to the north. As of 2016, 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 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 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’s proposals to reform Benin’s political model 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 a revamping of political party funding. The socio-political atmosphere remains largely favorable and conducive for reforms, but economic expectations remain high and there is pressure on the government to accelerate efforts to reduce high youth unemployment, address poor living standards, accelerate economic growth, and improve the quality of public services.
Benin’s economy relies heavily on informal re-export and transit trade to Nigeria, which makes up roughly 20% of GDP, and on agricultural production. The tertiary sector as
Despite moderate GDP growth of between 4% and 5% annually over the past two decades, poverty remains widespread and often on the rise in Benin. National poverty rates were 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 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 their geographical distribution 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. The outlook for 2017 is clouded by the impact of a possible further depreciation of the Nigerian naira, which will be felt through more reduction in re-exports and exports to Nigeria, as 80% of Benin’s imports are typically destined for Nigeria via informal cross-border trade.
The government needs to accelerate reforms to reduce poverty and promote shared prosperity. Despite some progress, a weak business environment continues to be a deterrent for domestic and international investors. In Doing Business (DB) indicators, Benin ranked 153 in DB2016 and 155 in DB2017, but made progress on “starting a business” as well as on “getting electricity.” However, more needs to be done to improve access to credit and tax payments.
In addition, Benin continues to face major corruption challenges, ranking 95 out of 175 countries in the Transparency International’s 2016 Corruption Perceptions Index (it was ranked 83 in 2015).
Last Updated: Oct 10, 2017