Washington, D.C., March 1, 2022—Benin can ensure the structural transformation of its economy through investments in new growth drivers capable of increasing labor productivity and creating better jobs for its labor force, especially youth and women. That is the conclusion of the new Benin Country Economic Memorandum released today by the World Bank.
Although economic growth has increased over the past decade, averaging 5.1% per year and positioning the country as one of the region’s rising economies, it has not translated into a significant increase in labor productivity and remains volatile. Moreover, this robust growth has not led to sufficient per capita income gains over the past 10 years. Indeed, while the country’s real per capita income has risen, closing the gap with the regional average, the average growth rate of 2.2% between 2011 and 2019 remains insufficient to solidify the gains and enable the country to transition to a middle-income economy.
“To continue on the upward path and build a middle-income economy, Benin must be able to maintain the growth momentum it has achieved in recent years,” says Nathalie Picarelli, World Bank economist and lead author of the report with Xun Yan. “Deepening reforms for human capital development, supporting infrastructure and services, and integrating the economy more effectively into global trade are among the avenues to pursue.”
Entitled Accelerating the Growth Momentum and Creating Better Jobs, the report finds that Benin has much to gain from reducing gender inequality, strengthening human capital, and improving the quality of the labor market in order to reap the economic benefits of the demographic transition.
In addition, the report analyzes the country’s economic growth models in order to distill the key drivers and limitations of the current growth model. It provides answers to questions such as: How can Benin grasp the growth dividends of its demographic transition? How can better transport infrastructure and services fuel growth and economic transformation? Can trade increase private sector competitiveness and economic diversification?
To accelerate the growth momentum and create better jobs, the study recommends strong policy options in these three key areas of focus.
“By improving transport infrastructure and services to better connect people and markets, reduce economic distance, and create agglomeration economies, the country can become more competitive in the region,” notes Daniel Benitez, Senior Transport Economist and one of the report’s authors. “This goes hand in hand with diversifying exports, upgrading informal transit trade, and strengthening the ecosystem needed to develop a more competitive export sector.”
The Benin Country Economic Memorandum aims to support Benin’s policy makers in their reform efforts and to enrich the debate on the country’s socioeconomic development. The 2022 report builds on the previous Country Economic Memorandum (2009) and recent analytical reports focusing on the 2011-2019 period.
In 2020, Benin officially transitioned from a low-income country to a lower middle-income country.
“Benin’s current economic model deserves to be supported in depth, with robust structural reforms to produce growth that generates labor productivity and quality jobs,” says Atou Seck, World Bank Country Manager for Benin. “This report proposes ways to strengthen the economic growth momentum built in recent years in Benin.”