The Democratic Republic of BENIN: Economic Perspectives
As a coastal sub-Saharan country, Benin’s economic growth is very dependent on the port of Cotonou. Strategically located, the port is the country’s main center of economic activity, facilitating the transit of goods from Togo to Mali.
Benin’s economic growth is expected to pick up in 2021 (5.5%), after being slowed by the fall in trade with its Neighbour Nigeria and the Covid-19 pandemic (3.8%), and to maintain its upward curve in 2022 and 2023 (6.5%).
However, the country’s ambition to emerge as a major player in logistics faces significant obstacles such as corruption and competition from other major regional ports (Lagos-Nigeria, Abidjan-Côte d’Ivoire, Tema-Ghana and Dakar-Senegal).
- The Agricultural sector accounts for 9% of the country’s GDP and employs up to 38% of the workforce. 33% of Benin’s territory is suitable for agriculture and half of the population depends on subsistence agriculture. Cotton remains the main crop and the main export product in the country.
- The Secondary Sector contributes to 3% of GDP and employs nearly 18% of the working population. The main sub-sectors are Textiles, Agro-food, building materials Cement.
- The Tertiary Sector contributes to 48% of GDP and employs about 43% of the total working population. Its development is linked to Tourism which is driving transport and hotel sectors.
With more than 12.5 million inhabitants, the 30th most populous country in Africa, Benin, is also the continent’s 32nd richest country with an estimated GDP of USD 15.67 Billion in 2020. Even if the government is undertaking many policies to reduce the poverty rate, it remains high (40.2%, UNDP) while the unemployment rate is estimated at only 4.9% (ILO).
| Population (2020 UN) | 32.51 million inhabitants |
|---|---|
| GDP / Capita USD (2021, IMF) | USD 10.0 |
| HDI (2020, UNDP) | 79th over 190 |
| Doing Business (2020 World Bank rank) | 75th over 190 |
| Corruption Perceptions Index 2021 | 36h over 180 |
| Unemployment rate (FMI 2021) | 9.7% |
On a Demographic point on view, Benin faces a rapid population growth of 2.7% per year. T44% of the population live in urban areas and the four big cities of Benin are: Cotonou (the Capital), Djougou, Parakou and Abomey. 43% of the population is Christian, 24% is Muslim, 17% is Voodoo, and 15.5 have traditional beliefs. Density is very high with 102 inhabitants per Km², and literacy rate barely reach 34.7% of the population.
On a Political point on view, after spending 10 years in power, Tomas Boni Yayi, the outgoing President handed over power, without a hitch, to his successor Patrice Talon who won the election with 65.67% of the vote. The March 2016 Presidential election took place peacefully with a high participation rate of 66% in the second round. After his election, he reformed the Charter of political parties, the electoral code and revised the constitution in November 2019. On April 2020, President Talon was reelected with 86.3% of the vote in an election preceded by violence which would have killed several people.
On an Economical point of view, since 2015, Benin has been in a sustained growth trend with its growth rate reaching 6.9% of GDP in 2019. Such a performance has been driven by consumption and public investments. President Talon presented five years ago the Government’s Action Program (GAP: 45 projects of € 13.8 Billion) aiming to:
- create 500 000 Jobs in 2021,
- enhance the cultural and tourist potential of Benin and more important,
- develop infrastructures and improve access to water and energy in a country very dependent on its neighbours’ energy production
- Improve the business climate with legal and administrative reforms.
The economic growth is also explained by the continued growth of Cotton Production (620,000 tons of seed cotton in 2018/19 and more than 700,000 in 2019/20).
However, the pandemic has triggered the decline in revenues and widened the country’s deficit (to 3.5%), which is expected to reach 5.1% in 2021. Even if inflation will drop to 2% in 2021 (3% last year), the debt-to-GDP ratio will increase to 47.7% this year vs 45.4% last year.
| Economic Indicators | 2019 | 2020 | 2021e | 2022e | 2023e |
|---|---|---|---|---|---|
| GDP ($ Billion current price) | 230.87 | 205.46 | 225.86 | 231.69 | 246.72 |
| GDP growth (%) | 2.2 | -11.0 | 10.0 | 4.6 | 4.5 |
| Inflation rate (%) | 2.1 | 1.8 | 3.1 | 2.5 | 2.3 |
| Public debt (% GDP) | 27.1 | 35.1 | 35.0 | 36.9 | 38.5 |
| Current balance (% GDP) | -0.9 | 0.8 | 0.4 | 0.1 | -0.4 |
Exports and Imports
In 2019, Benin was the 124th economy in the world in terms of GDP (current US$), the 144th in the total exports and 137th in total imports. The country exported USD 1.62 Billion and imported USD 5 Billion, resulting in a negative trade balance of USD 3.38 Billion.
The top exports of Benin are Raw Cotton ($463M), Refined Petroleum ($380), Gold ($223M), Coconuts, Brazil Nuts and Cashews ($153M) and Raw Copper ($49.4M). Benin exports mostly to Nigeria ($408M), Bangladesh ($229), United Arad Emirates ($222M), India ($213M), and China ($132M).
The top imports are Rice ($761M), Cars ($315M), Palm Oil ($225M), Electricity ($197M) and Light Pure Woven Cotton ($178M). It imports mostly from China ($1.41B), Thailand ($425M), India ($422M), Togo ($290M) and United States ($270M).
