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key figures
Land area, thousands of km
Population, thousands (2007)
GDP per capita, USD at
constant 2000 prices (2007)
Life expectancy (2007)
Illiteracy rate (2007)
113
9 033
345
57.6
54.7
Benin
1000
900
6
800
5
700
600
500
3
400
300
200
1
100
0
0
2001
2002
2003
2004
2005
2006
2007(e)
2008(p)
2009(p)
Source: IMF and local authorities data; estimates (e) and projections (p) based on authors calculations.
1 2 http://dx.doi.org/10.1787/316155305683
AfDB/OECD 2008
Benin
140
Agriculture
19.2%
Government services
(percentage)
25.2%
11.7%
10.8%
18.6%
5.8%
Trade
8.4%
0.3%
Other industry
Manufacturing
Source: Authors estimates based on National Institute for Statistics and Economic Analysis data.
1 2 http://dx.doi.org/10.1787/317353615784
AfDB/OECD 2008
Benin
Percentage changes,
volume
Contribution to real
GDP growth
1999
2006
2007(e)
2008(p)
2009(p)
2007(e)
2008(p)
2009(p)
18.3
5.2
13.1
20.6
4.6
15.9
13.5
44.5
4.5
8.8
20.0
4.3
5.0
3.8
5.5
2.5
1.8
0.6
1.8
1.1
0.6
1.0
0.2
0.8
Consumption
Public
Private
87.7
13.0
74.7
88.8
9.3
79.5
2.9
3.4
2.8
3.9
3.5
3.9
4.8
3.6
4.9
2.5
0.3
2.2
3.3
0.3
3.0
4.1
0.3
3.8
-6.1
29.1
-35.1
-9.3
16.7
-26.0
7.2
9.0
8.1
7.2
7.0
4.9
-0.8
1.5
-2.3
-0.2
1.7
-1.9
0.2
1.5
-1.3
4.2
4.9
5.3
External demand
Exports
Imports
Real GDP growth
Source: Local authorities data; estimates (e) and projections (p) based on authors calculations.
1 2 http://dx.doi.org/10.1787/320701282554
AfDB/OECD 2008
141
Benin
142
Macroeconomic Policies
On 5 August 2005, Benin agreed to a second threeyear economic and financial programme with the IMF
under the Poverty Reduction and Growth Facility
(PRGF). (The first was agreed in 2000 and covered the
2000-03 period.) The principal aim of the programme
was to help Benin pursue the reforms needed to
strengthen its economy and achieve lasting poverty
reduction. In September 2007, the third review of the
PRGF concluded that Benin had met all the quantitative
implementation criteria and indicative goals laid down
in the programme for end-June 2007. However, the
country was behindhand in implementing important
structural reforms, such as privatising the industrial
plants of the state-owned cotton company Socit
nationale pour la promotion agricole (Sonapra). In
addition, the continuing rise in oil prices is increasingly
hurting the country: according to a study by the Central
Bank of West African States (BCEAO), it cost Benin
0.24 of a percentage point of GDP over the 2004-06
period. As in all other WAEMU member states, the
increase in oil prices has also affected public finances.
The impact on the fiscal deficit has grown steadily
worse, from 0.46 of a percentage point of GDP in
2004 to 0.62 in 2006.
Fiscal Policy
The measures adopted by the government in 2006
to secure its revenue and rein in expenditure have taken
the basic primary balance from a deficit of 1.4 per cent
in 2005 to surpluses of 0.4 per cent in 2006 and 1 per
cent in 2007. On the revenue side, the tax and customs
authorities have stepped up their measures to control
and combat fraud, and customs clearance procedures
have been streamlined and computerised. These
measures have made it possible to take advantage of the
AfDB/OECD 2008
Benin
(percentage of GDP)
1999
2004
2005
2006
2007(e)
2008(p)
2009(p)
18.7
13.1
3.3
18.3
14.6
1.9
18.4
14.5
1.7
19.2
15.4
2.3
19.4
15.4
2.5
19.8
15.6
2.6
19.7
15.5
2.6
16.8
10.5
9.6
4.3
0.9
6.1
20.1
13.9
13.6
6.8
0.3
6.1
21.3
15.0
14.7
6.8
0.3
6.3
19.6
14.9
14.6
5.5
0.3
4.6
21.4
15.0
14.6
5.4
0.4
6.4
22.6
15.2
14.7
5.4
0.5
7.4
22.3
15.1
14.6
5.3
0.5
7.3
2.7
1.8
-1.4
-1.7
-2.6
-2.9
0.0
-0.4
-1.6
-2.0
-2.3
-2.8
-2.2
-2.7
Primary balance
Overall balance
Monetary Policy
The money supply expanded strongly in 2006
(16.5 per cent), in line with the improvement in the
banking systems net external assets, which was largely
due to the increase in private and public transfers. In
2007, monetary expansion was held to 7.6 per cent,
as net external assets increased less rapidly. The
governments net position in relation to the banking
system further improved in 2007 due to the good tax
take. Net credit to the state declined in 2007 by an
estimated 8.2 per cent of the money supply, while
credit to the private sector increased by 9.8 per cent.
Monetary policy will remain in the hands of the
BCEAO, with a view to maintaining WAEMUs
external position by keeping international reserves at
a satisfactory level and inflation below 3 per cent. The
money supply in Benin is expected to increase by
8.2 per cent in 2008, with credit to the private sector
rising by 7.7 per cent and net credit to the state dropping
slightly (-1.8 per cent).
External Position
Benins trade balance and current account are
structurally in deficit. The countrys external position
deteriorated during the 2000-05 period owing to the
combined effects of falling revenues from cotton exports
and the rising cost of imported oil products. The current
African Economic Outlook
143
Benin
(percentage of GDP)
1999
2004
2005
2006
2007(e)
2008(p)
2009(p)
Trade balance
Exports of goods (f.o.b.)
Imports of goods (f.o.b.)
Services
Factor income
Current transfers
-8.6
16.9
25.5
-1.6
-0.6
5.5
-11.0
8.5
19.5
-1.2
-1.0
6.0
-9.3
7.5
16.8
-1.1
-0.9
4.8
-10.8
5.3
16.1
-0.8
-0.4
5.7
-10.7
5.5
16.2
-0.6
-0.5
6.5
-11.1
5.6
16.8
-0.6
-0.5
5.6
-10.7
6.0
16.7
-0.5
-0.6
5.6
-5.3
-7.2
-6.5
-6.3
-5.4
-6.6
-6.2
Source: Local authorities data; estimates (e) and projections (p) based on authors calculations.
1 2 http://dx.doi.org/10.1787/322341757774
144
Service/X
80
70
60
50
40
30
20
10
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: IMF.
1 2 http://dx.doi.org/10.1787/318328633812
AfDB/OECD 2008
Benin
Structural Issues
Recent Developments
The reforms undertaken in Benin in recent years
stem from its 2003-05 Poverty Reduction Strategy,
which sets out four priorities: i) strengthening the
macroeconomic framework in the medium term; ii)
human capital development and environmental
management; iii) strengthening of governance and
institutional capacity; and iv) promotion of long-term
employment and building the capacity of the poor to
contribute to the decision-making and production
processes. Structural reforms have concentrated
primarily on the privatisation of state-owned enterprises,
particularly Sonapra, SBEE, the post and
telecommunications office and the Autonomous Port
of Cotonou (PAC). Benin has fallen behind schedule
in implementing these reforms, particularly as regards
the liberalisation and privatisation of state-owned
enterprises in the basic infrastructure and cotton sectors.
The government had committed to partial privatisation
of Sonapras cotton ginning factories with the aim of
permanently restoring the integrated nature of the
sector in a context of private management. It initiated
the privatisation process in August 2007 through an
invitation to tender that resulted in the appointment
of Socit commune de participation (SCP) to
adjudicate the share of Sonapras capital to be privatised.
In October 2007, it created Socit de dveloppement
du coton (Sodeco), a semi-public company owned
primarily by the state and SCP, to take over the Sonapra
factories. However, on 2 November the government
called a halt to the entire privatisation process, citing
irregularities in the adjudication procedure and in the
creation of Sodeco. It intends to restart the process
once an overall reform strategy for the cotton sector has
been developed with the support of external partners.
The future strategy will taken into account the problem
of agricultural inputs, fairer compensation for farmers
and the need to provide support and information to
AfDB/OECD 2008
145
Benin
146
Benin
147
Benin
148
Political Context
Following the presidential elections held in April
2006, the transparency of which was applauded by the
international community, the results of the April 2007
legislative elections gave the president a majority in
parliament. He has nonetheless reshuffled his cabinet
several times. Municipal elections are scheduled for
April 2008.
The fight against corruption is an important
component of the poverty reduction strategy in Benin.
African Economic Outlook
Benin
149
AfDB/OECD 2008