Benin has a short (121 kilometers or 75 miles) coastline on the Gulf of
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.
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.
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
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