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FEATURE STORY

Sewing a New Future for Entrepreneurs in Benin

April 24, 2015

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Beninese entrepreneur Sebastien Gnonhoussou was able to register his small business within 24 hours and open a bank account as part of a new law designed to encourage small entrepreneurs to join the formal sector.

World Bank Group

Sebastien Gnonhoussou has struggled most of his life to support his family. Sitting amidst piles of colorful fabrics and a manual sewing machine, he tells the story of his long and interesting journey to entrepreneurship.

A tailor, Sebastien was one of thousands of individuals operating in the informal sector in Benin, a small country in West Africa with a population of roughly 10 million people. He faced many challenges to grow his business because of insufficient access to credit and financial services, common constraints to business formalization and private sector development in Sub-Saharan Africa.

In 2014, Sebastien was offered the opportunity to formalize his small business by registering as an entreprenant, a new simplified legal regime adopted by the Organization for the Harmonization of Business Law in Africa (OHADA).

The regime is specifically designed to encourage small entrepreneurs to join the formal sector. As a beneficiary of the Entreprenant pilot project in Benin (the first of 17 member states to implement the status), Sebastien received valuable support to register his business within 24 hours, at no cost, to obtain a professional “entreprenant” card, and to open a bank account. 


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Sebastien Gnonhoussou holds up his entreprenant card.

World Bank Group

" Now that I have a checkbook, I have become "un grand Monsieur", a Big Boss. "

Sebastien Gnonhoussou

Entrepreneur


In Cotonou, the World Bank Group has partnered with the one-stop-shop for business registration, two local business incubators (CGA), the tax authority (DGI), and two banks to streamline the business registration process, making it easier, faster and cheaper to register. The project also supports practical training and advisory services in key business areas, including:

  • Accounting
  • Management
  • Introduction to legal and tax obligations
  • Financial education and awareness 
  • Business planning
  • Restructuring and growth strategies

Though the project, Sebastien benefitted from training in accounting, inventory management and finance. Consequently, his management skills have greatly improved, and his profits are increasing.

“Now that I have a checkbook, I have become un grand Monsieur, a Big Boss” says Gnonhoussou, who dreams of exporting his outfits to other African countries and beyond, “even to Europe!”

With more disposable income, Sebastien is already envisioning a brighter future for his two children and many relatives for whom he provides food, healthcare and school fees.

Since 2012, the World Bank Group has been supporting the government of Benin to implement investment climate reforms that promote trade and competitiveness in the private sector. The Benin Investment Climate Program specifically aims to build a strong business enabling environment by simplifying business entry and operation procedures, while the Competitiveness and Integrated Growth Opportunity Project aims to foster entrepreneurship. Both projects jointly support the implementation of the entreprenant legal status, including access to credit and incentives such as: lighter tax regime, assistance in the formalization process, and support with bank, tax mediation and counseling services.  

Results

As a result of the entreprenant pilot project, the process of registering a business has become easier, cheaper and faster for entrepreneurs in Benin. The pilot project was launched on April 29, 2014. Since then, over 400 small entrepreneurs have formalized their business.

The country’s business regulatory environment has also shown a significant improvement in its Doing Business ranking from 176 in the Doing Business 2012 report to 151 in Doing Business 2015. Furthermore, Benin has been featured among the top reformers in the Doing Business 2015 report.

The entreprenant status will be rolled out nationwide on May 5, 2015 by the President of Benin. The project is expected to attract hundreds of small businesses to formalize, generate thousands of jobs and contribute to sustainable economic growth in Benin.

Benin is the first OHADA member state to implement the new simplified legal regime. The expectation is that the status will be rolled out across all 17 OHADA member states (most francophone countries in Sub-Saharan Africa) in the near future.


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