Bordered by Togo, Nigeria, Burkina Faso, and Niger, Benin has a 121-kilometer-long coastline on the Gulf of Guinea and a population of close to 11.4 million (2018). The country has recently been carrying out key economic and structural reforms.
Benin is a stable democracy. All presidential, legislative, and local elections held since the end of the Marxist-Leninist regime in 1989 have been conducted peacefully. The most recent presidential elections held in March 2016 were won by the multi-millionaire cotton tycoon, Patrice Talon. The government enjoys a comfortable majority in Parliament (61 of 82 deputies). In accordance with the party system reform approved by the National Assembly in 2018, several political parties and movements were merged to create a new charter of political parties. Benin now has around 10 State-recognized parties compared to over 200 identified parties prior to the reform. Legislative elections are due in April 2019.
Benin's economy is heavily reliant on the informal re-export and transit trade with Nigeria (approximately 20% of GDP), and on agriculture. Growth accelerated from 5.6% in 2017 to 6% in 2018 (3.1% per capita GDP), driven by vibrant port activity and a sound agricultural sector buoyed by record cotton production and the emerging diversification of sectors. Growth was also driven by an increase in public investments (particularly infrastructure) and the performance of the service sector. The inflation rate quickened to 2.3% in 2018 (versus 0.1% in 2017 and -0.8% in 2016), owing primarily to rising food prices. Thanks to higher agricultural exports, the current account deficit improved slightly, narrowing from 9.9% of GDP in 2017 to 8.9% of GDP in 2018. Wage bill and interest payment increases (+0.2% of GDP each) were more than offset by the reduction in current transfers (-0.2% of GDP), expenditures in goods and services (-0.3% of GDP), and investment spending (-0.1% of GDP). As a result, the primary deficit narrowed from 5% of GDP in 2017 to 3.4% of GDP in 2018, while the overall fiscal deficit (commitment basis, including grants) fell from 5.9% of GDP to 4.7% of GDP. However, an increase in domestic debt led to a concomitant rise in the debt-to-GDP ratio from 54.2% in 2017 to 54.4% in 2018.
Despite steady, robust economic growth over the past two decades, poverty remains widespread owing to limited growth in per capita terms (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 ones), but
Benin is vulnerable to exogenous shocks: adverse weather conditions, varying terms of trade (cotton and oil prices), and developments in Nigeria—its main trading partner and the main source of its economic activity as 80% of Benin’s imports are destined for Nigeria. The economic recovery in Nigeria, where the recession officially ended in September 2017, fueled growth in Benin.
Despite some progress in the formal sector, 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.” Benin must, however, do more in the areas of “getting credit” and “paying taxes.” Lastly, despite strides made, Benin continues to grapple with major corruption-related challenges, ranking 85th out of 185 countries on Transparency International's Corruption Perceptions Index for 2018.
Last Updated: Mar 22, 2019