A US$50 million to help over 1 000 local tourism or tourism-related firms expand economic opportunities and create jobs
WASHINGTON, March 25, 2016— The Board of the World Bank Group today approved a US$50 million International Development Association (IDA)* credit to help Benin develop its tourism sector, the country’s second largest source of foreign exchange earnings and third largest employer, after agriculture and commerce. It will reduce the vulnerability of the economy induced by high dependency on informal trade with Nigeria and the cotton sector.
The new Benin Cross Border Tourism and Competitiveness project (CBTCP) supports the key pillars of Benin’s growth and poverty reduction strategy, namely growth and redistribution, and is well aligned with the World Bank Group’s twin goals of ending poverty and boosting shared prosperity. By helping increase cross-border tourism and private sector investment in the country’s selected key touristic destinations (mainly Abomey-Calavi, Cotonou, Ouidah) and value chains, the CBTCP will help over 1 000 local tourist firms (of which 20 percent are led by female entrepreneurs) expand their economic opportunities and create jobs.
“Benin has a natural comparative advantage and possesses important prerequisites for successful tourism development, including endogenous natural and cultural assets clustered around a compact coastal region and close to key potential source markets”, said Pierre Laporte, the World Bank Country Director for Benin, Burkina Faso, Côte d’Ivoire, Guinea and Togo. “If efforts are made to meet this potential, tourism’s direct contribution to the country’s GDP could be increased up to 30 percent and could generate an estimated 30,000 additional jobs”, he added.
A key constraint for the development of tourism in Benin is that many private operators in the sector lack the minimum capacity to apply for loans, and that the banks have a weak appetite to deal with such loans. The CBTCP will increase incentives for financial institutions to lend and support tourism-related micro, small and medium sized enterprises (MSMEs): “Through a joint risk-sharing facility, the World Bank and the International Finance Corporation (IFC) will encourage private commercial banks and other financial intermediaries to serve a new cohort of MSME clients by partially mitigating creditor risks through first-loss cover”, Pierre Laporte indicated.
The CBTCP will be implemented during a 5-year period, from 2016 to 2021. It supports the implementation of Benin’s tourism policy for 2013-2025 which aims to (i) increase and improve the touristic offer by upgrading sites, infrastructure, skills and quality of services; (ii) promote tourism through marketing, branding and ecotourism development; and (iii) reinforce the managerial and sectoral capacities by improving the institutional, legislative and regulatory frameworks, statistics and sectoral financing sources.
* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 77 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.3 billion people who live in IDA countries. Since 1960, IDA has supported development work in 112 countries. Annual commitments have averaged about $19 billion over the last three years, with about 50 percent going to Africa.