Benin’s geographical position at the juncture of two major regional corridors—the Abidjan-Lagos and Cotonou-Niamey corridors—makes this West African country an important commercial and tourism hub. Benin has a 121-kilometer-long coastline on the Gulf of Guinea and is bordered by Nigeria, Burkina Faso, Niger and Togo.
Benin is a politically stable country and has achieved successive democratic transitions. On January 8, 2023, the parties supporting President Patrice Talon won the legislative elections, securing 81 of the 109 seats in the National Assembly. The Democrats, the main opposition party that remains closely linked to former president Yayi Boni, won 28 seats, marking the opposition’s return to parliament after a four-year absence. Political parties and movements were merged under the September 2018 party reform system while others were unable to present candidates for the legislative elections.
Benin’s economy is still reliant on agriculture and on formal and informal reexport and transit trade with Nigeria. The year 2022 was marked by a slight slowdown in growth to 6%, after a strong rebound in 2021 to 7.2%. Agricultural production, particularly cotton, and the services sector boosted the growth rate. Inflation accelerated to 2.5%, but remains moderate compared to the regional average, thanks in particular to targeted and temporary fiscal measures and good food crop production.
Fiscal policy remained expansionary for a third consecutive year with a deficit that narrowed slightly but remains high at 5.6% of GDP for 2022 against 5.7% in 2021. The expiration of a number of fiscal measures put in place to support the economy and the gradual increase in tax revenues will help reduce the public deficit starting in 2024. While the risk of debt distress is still deemed moderate, public debt has risen sharply, from 41.2% of GDP in 2019 to 52.8% in 2022, an increase of 11.6 percentage points of GDP over three years.
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: Mar 30, 2023