WASHINGTON, September 15, 2023 – The World Bank today approved $230 million in financing from the International Development Association (IDA)* to help the government of Benin strengthen private sector-led growth, boost domestic revenue collection, and build social and climate resilience.
This first development policy operation will support reforms that promote inclusive, resilient, and private sector-led growth. The program has three pillars. The first pillar supports the establishment of a new public-private partnership (PPP) framework, the creation of a new ecosystem for the development of micro, small, and medium enterprises, and the improvement of the investment climate. The second pillar supports reforms to boost domestic revenue collection, creating the fiscal space needed for public investment and debt sustainability. The third pillar targets reforms aimed at building social and climate resilience, in particular through subsidized health services for the poor, adaptive social protection, and strengthened disaster risk management.
“Despite external shocks in recent years, Benin is on the right growth path. It is critically important for the country to pursue transformational reforms in order to sustain its growth performance and improve the living conditions of vulnerable populations,” said Nestor Coffi, World Bank Country Manager for Benin. “This financing will enable Benin to undertake reforms to rebuild fiscal space, facilitate job-creating investments by the private sector, and strengthen social and climate resilience.”
Benin ranks 152nd out of 181 countries on the extreme climate vulnerability index. The increased frequency of flooding is exacting a heavy toll on the population and the agricultural sector, and its rate of coastal erosion, one of the highest in the Gulf of Guinea, poses a threat to more than 50 percent of the population living in the coastal region, the existing key infrastructure, and economic activity. To help Benin be more financially prepared to respond to immediate needs stemming from natural disasters, the new financing includes an $80 million Catastrophe Deferred Drawdown Option (Cat DDO) that can be fully or partially disbursed in the event of a natural disaster or a public health emergency.
The enactment of a new PPP law and the implementation of support measures will foster private sector participation in public projects and help attract private investors to implement public-private partnership projects. Increased private capital mobilization is also expected to help address climate finance needs.
The design of this operation is aligned with the government of Benin’s Action Plan for 2021–2026. The reform program supports the green, resilient, and inclusive development agenda by strengthening the country’s adaptation and resilience to climate change through improved practices to prevent, prepare for, and respond to climate shocks. It helps the government to be better prepared financially to meet needs arising from a natural disaster.
*The International Development Association (IDA) is the World Bank institution that provides aid to the world’s poorest countries. Established in 1960, it provides 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 76 poorest countries, 39 of which are in Africa. IDA resources help effect positive change in the lives of the 1.6 billion people living in the countries that are eligible for its assistance. Since 1960, IDA has supported development work in 113 countries. Annual commitments are constantly on the rise and have averaged $21 billion over the past three years, with about 61% going to Africa.