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 term in April 2021, and the government currently enjoys an absolute majority in Parliament (83 deputies). Political parties and movements were merged under the September 2018 party system reform and Benin now has only about 15 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 7.2%. The services and construction sectors were the main drivers of this growth. While inflation averaged 1.7% during the year, inflationary pressures have increased significantly since the end of 2021. Inflation has been driven by higher food and petroleum product prices and has accelerated since the start of the conflict in Ukraine.

Expansionary fiscal policies were pursued, and the fiscal deficit (grants included) widened from 4.7% of GDP in 2020 to 5.7% in 2021. Although overall revenues remained fairly resilient, response plans significantly increased government expenditure during the 2020-2021 period. Fiscal measures adopted to support the purchasing power of households will put a strain on public accounts and the deficit is expected to remain high in 2022.

Social Context

In 2021, Benin had 12.45 million inhabitants, with a fertility rate of 5.7 children per woman 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%. The international poverty rate (proportion of persons living on less than $1.90 per day) was estimated at 19.2% in 2019.

In the 2018-2019 school year, only 54.8% of students completed primary education. Some 32.2% of children were chronically malnourished while 11% were severely malnourished.

A high-frequency survey conducted among 1,500 households in May 2021 revealed that 58% of individuals had experienced a decline in income, while 5% had no income.  Despite lower impacts, the survey also confirmed that access to food products remains a concern as a result of the rise in prices.

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 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 goods and commodities (e.g., secondhand cars and rice) to Nigeria. Almost 85% of the labor force works in the informal economy. Domestic resource mobilization is among the lowest in WAEMU, despite the remarkable resilience shown during the 2020-2021 period.  The short-term outlook depends on the uncertainties related to the geopolitical context, particularly in the Sahel, and to the effects of climate change. The conflict in Ukraine has accelerated inflationary pressures, particularly on food, and could trigger shortages.

Last Updated: Sep 30, 2022

In December 2016, the ruling government adopted the 2016-2021 Government Action Program, a development plan structured around 45 flagship projects aimed at improving productivity and living conditions. In January 2019, a National Development Plan (NDP) was launched for the 2018-2025 period, with the aim of achieving 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, which is aligned with the government’s development plan, covers the 2018-2023 period and is structured around three 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 $2.01 billion to finance 16 national projects; seven regional projects, financed to the tune of $371.98 million, complete this portfolio. 

In response to COVID-19, the World Bank:

• stepped up surveillance of epidemic diseases through the Regional Disease Surveillance Systems Enhancement project with $23 million in support;
• mobilized $10.4 million for the COVID-19 Preparedness and Response Project as part of the World Bank Group’s global emergency response, and provided two additional financings ($943,000 and $30 million) for the vaccination campaign.  A third additional financing of $10.7 million was approved by the Board of Directors on April 21, 2022;
• allocated roughly $10 million from the nutrition project;
• provided $25 million in additional financing for the Cross-Border Tourism and Competitiveness Project.

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

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

IFC and the World Bank conducted a joint diagnostic assessment of the private sector in Benin with a view to identifying short- and medium-term solutions to obstacles to private sector development and investment mobilization.  The diagnostic assessment highlights the opportunities for inclusive growth and job creation, particularly in the agriculture, agribusiness, and tourism sectors, as well as opportunities for regional integration. It proposes recommendations for a model that combines reforms and investments in public goods with advisory and technical assistance services aimed at boosting private investment.

Last Updated: Sep 30, 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).  This new operation should become effective during the first half of 2023 and is a continuation of the Community and Local Government Basic Social Services (ACCESS) project that closed at end-June 2022.

By end-March 2022, the social safety net program under ACCESS had provided unconditional cash transfers to 19,216 extremely poor households. Of these households, 17,812 also received conditional cash transfers for their participation in labor-intensive community works, and 12,006 received support to develop income-generating activities (IGAs) for their empowerment.  These transfers have helped beneficiary families 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 in the country’s 77 communes.  These include classrooms, school canteens, health centers, market facilities, and rural roads.

The government is also implementing the Youth Inclusion Project (PRODIJ),  with World Bank support. This operation, which became effective in March 2021, 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. The project will provide a grant to 6,000 vulnerable young people. The project will also support the technical and vocational training system by providing training in high-income generating activities to 4,000 young people, as well as short-term training to 12,000 young people. The Azôli program is operational. 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. The WURI Program, which was officially launched in Benin in November 2020, has already provided 351,000 persons [with their unique identification number].

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. This project 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 August 30, 2022, the project had benefited 11,974 beneficiaries. It supported the establishment of 5,892 hectares of cashew plantations and rehabilitated 37,924 hectares of old cashew plantations. The project is also helping rehabilitate 1,200 kilometers of rural roads to facilitate market access for agricultural products.  With a view to increasing and diversifying agricultural exports, the project is financing the construction of a cold chain warehouse for perishable produce at the Cotonou airport. The project has also provided matching grants and has already received 2,023 applications for the financing of subprojects for the pineapple and cashew value chains. These subprojects are being evaluated to select the best subprojects that will boost the contribution of these value chains to agricultural exports. 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: Sep 30, 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: Sep 30, 2022