Brief last updated March 26, 2008 History 
Benin, formerly known as Dahomey, was a French colony from 1902 until it achieved independence in 1960. Its name was changed to Benin in 1972 following a military coup d’état. Since a national conference in 1990 that shook the foundation of the "Marxist-Leninist" state that had been established in 1972, Benin has become a multiparty democracy with Mr. Nicephore Soglo defeating the former military leader Mr. Kerekou to become president in the March 1991 election. Mr. Kerekou returned to office in the election of 1996, and was re-elected in March 2001 for a second and last five-year term as stipulated in the Constitution. The transparent presidential elections of March 2006 led to the election as Head of State of an independent candidate, Mr. Yayi Boni, the former President of the West African Development Bank, and resulted in major political changes. Increased freedom of the press and strengthening of civil society institutions have reinforced the country's democratic foundations. Market-oriented economic policies have been implemented since 1991 and there is broad political consensus for these policies. MAIN FACTS Basic facts Real GDP growth rate recovered to 3.8 percent in 2006 from 2.9 percent in 2005 and is estimated to have further strengthened to 4.6 percent in 2007 reflecting a rebound in cotton and services sectors. Real GDP growth is expected to reach 5.3 percent in 2008. Despite increases in the international prices of oil and foods, inflation was broadly contained under the WAEMU convergence criterion of 3.0 percent in 2006-07 through strong fiscal discipline and a prudent monetary policy at the regional level. With a per capita income of US$540 in 2006 and a ranking of 163 out of 177 countries according to the 2007 Human Development Report, Benin remains a very poor country. Although significant progress has been made in improving social indicators, it would be difficult to meet many of the MDGs in the absence of sharp acceleration of current trends. According to latest available data, Benin is likely to meet one of the targets for MDG1, namely that of eliminating hunger as well as the universal primary education goal (at least for boys) and the MDG for rural water supply. But the MDG targets for the health sector and gender would be difficult to achieve without substantial progress. CPIA rating (2006) is 3.6. Transparency International: With an overall score of 2.7 from Transparency International in 2007, Benin rates relatively well in SSA (21st out of 50 countries). But Benin rates poorly by international standards (118th out of 179 surveyed countries) Doing Business ranking (2008): 151 out of 178 countries. HIV/AIDS prevalence is 2.1%. Poverty remains widespread with the incidence of monetary poverty steadying at almost 38 percent while non monetary poverty is estimated at 40 percent in 2006.
Recent political developments In March 2007, President Yayi Boni strengthened his position following the legislative elections in which his coalition, “Force Cauris pour un Bénin Emergent (FCBE)” won the largest number of seats (35 out of 83) and negotiated a pro-government majority in the Parliament with seven minor parties and coalitions joining the FCBE. It is expected that this will facilitate the implementation of the President’s ambitious reform program. Further to the legislative elections, President Yayi Boni carried out a cabinet reshuffle, with 17 new ministers joining the government. The Government immediately dedicated itself to implementing the President’s reform program, including economic renewal, fight against corruption and promotion of good governance. Municipal elections are scheduled for April 2008. Economy Macroeconomic management has remained sound despite a difficult environment. Macroeconomic performance under the three-year Poverty Reduction and Growth Facility arrangement approved by the IMF Board in August 2005 has been satisfactory with strong fiscal performance, containment of inflation, and satisfactory, albeit lower than expected, growth. Macroeconomic performance has picked up slightly in 2006 – 2007 with real GDP growth rate recovering to 4.6 percent in 2007 from 2.9 percent in 2005 following a rebound in cotton and services sectors, while inflation has been broadly contained under the WAEMU convergence criterion of 3.0 percent in 2006 - 2007 despite increases in the international prices of oil and foods. The external current account deficit (excluding current official grants) has remained broadly in line with the IMF-supported program targets at 6.7 percent of GDP in 2007 as compared with 7.9 percent of GDP in 2004 while the overall budget deficit (on a payment order basis and excluding grants) narrowed from 4.6 percent of GDP in 2005 to 3.7 percent of GDP in 2007. Finally, debt cancellation under HIPC Initiative and MDRI helped to steadily reduce the country’s total public external debt from 58.3 percent in 2000 to around 13.6 percent of GDP at end-2007. Despite these achievements on the macroeconomic front, available data suggest that Benin would not be able to reach all the MDG targets by 2015. In particular, Benin is unlikely to meet the health MDGs without enhanced targeted measures and sharp acceleration of current trends. The gender-related MDG targets would also be difficult to achieve without substantial progress. Overall, enhancing economic growth, further strengthening of the country’s implementation capacity as well as increased financing will be required for Benin to meet the majority of the MDGs. The new Government is articulating a new economic vision for the country with a view to accelerating economic growth, reducing poverty and lifting Benin to emerging-economy status. It has thus developed a number of new strategies and initiatives including: (i) Strategic Orientations of Development (2006-2011); (ii) Growth Strategy for Poverty Reduction 2007-2009 (its PRSP 2); (iii) Private Sector Development strategy; and (iv) a Presidential Investment Council. In addition, the Government is pursuing an active and strong policy of transparency and improving governance that has led to several audits of public institutions including public enterprises, Ministries, and strengthened public finance and expenditure management. The vision of the Government as indicated in the various strategies and initiatives is to make Benin an emerging economy, well governed, united, peaceful, and prosperous through improving competitiveness, reducing poverty and improving the well-being of the population. Its five main areas of focus are: Acceleration of growth Infrastructure development Human capital building Promotion of good governance Balanced and sustainable development
Development picture/donor coordination Benin ’s development prospects are good. Real GDP growth is forecasted to increase to 5.7 percent by 2009, while inflation would be limited to less than 3 percent a year and the external current account balance would improve. However, achieving higher levels of economic growth and reducing the vulnerability of the economy to external shocks will require deepening and speeding up structural reforms to foster private sector development and to promote economic diversification. It will also require a concerted effort to fight corruption and build institutional capacity. The European Union, African Development Bank, UN agencies, bilateral donors, the World Bank, and the IMF are key partners in aid coordination for Benin. Non traditional creditors, such as China and the Islamic Banks, are starting to play an important role. The Government has started an initiative to develop an aid effectiveness and harmonization action plan, based on earlier work done by a joint Government-development partners group on aid effectiveness chaired by the Ministry of Economy. Furthermore, a Memorandum of Understanding (MoU) was signed on December 4, 2007 by the Government and the development partners providing budget support to accelerate the pace of harmonization. Many international and local non-governmental organizations are active in the country. World Bank role The World Bank is currently preparing its new Country Assistance Strategy for FY09-11 aiming at supporting implementation of the 2007-09 Growth Strategy for Poverty Reduction (second generation PRSP) that the Government adopted in April 2007. The World Bank portfolio financed by the International Development Association (IDA) consists of seven projects with a total commitment of US$254 million equivalent. These projects mostly support the consolidation of economic reforms, human development, infrastructure improvements, private sector growth, rural development and environment. In FY08, three projects are planned, one on Competitiveness and Integrated Growth Opportunity, an additional financing to the Second Decentralized City Management Project, and an Additional Finance for Energy Services Delivery Project. Benin also received assistance from the Global Environment Facility (GEF) for a US$6 million Forests and Adjacent Lands Management Project, which is ongoing. Another US$4.3 million GEF Coastal Protection Project was approved on February 19, 2008. Benin’s regional program portfolio consists of an ongoing West Africa Power Pool, Niger Basin Water Resources Management, and a West and Central Africa Transport and Safety and Security Project (APL Phase 2). Regional projects in the pipeline include a West and Central Africa Air Transport (Phase II-B), a follow-up Abidjan Lagos Transport Corridor, as well as Regional Trade Facilitation. IFC: IFC’s strategy in Benin focuses on improving the investment climate and working with financial intermediaries to improve access to micro, small and medium scale finance, as well as provide capacity building to beneficiary institutions. IFC will explore how it can support, via PEP Africa, the implementation of Benin’s private sector strategy, which has just been finalized by the government with the help of the World Bank PSD team and FIAS. IFC is also considering several investments in the financial sector and providing technical assistance to the financial intermediaries in building capacity and strengthening their operations. The IFC portfolio in Benin consists of a US$0.34 million investment in Finadev, a microfinance institution. IFC’s activities in Benin are covered by IFC’s regional office in Accra, Ghana . MIGA: MIGA’s current portfolio in Benin consists of one investment in the telecommunications sector, aimed at improving the country’s teledensity which is among the lowest in the world. Overall, the project should be particularly beneficial to the local business community. It has been financed by investors incorporated in the British Virgin Islands and has a remaining gross exposure of US$1.03 million. In the fourth quarter of FY08, the Agency expects to finalize contracts that would insure a project in the tourism sector in Benin. The project financed by Malian investors is supportive of MIGA’s strategy to facilitate south-south investments in support of SMEs. The anticipated gross exposure from this investment is $6.0 million. WBI : Benin 's participation in WBI programs has increased in the last two years. The bulk of the demand is in Education, Water and Rural Development, and Health and HIV/AIDS. Contacts Washington Headquarters
1818 H St. N.W.
Washington, D.C. 20433, USA Ms. Antonella Bassani
Acting Country Director
Sector Manager
Room J 9-141
Tel: (202) 473-1468
Email: Abassani@worldbank.org Ms. Nancy Claire Benjamin
Sr. Country Economist
Tel: (202) 473-0189
Email: Nbenjamin@worldbank.org Mrs. Evelyn Kennedy
Operations Analyst
Tel: (202) 473-3154
E-mail: Ekennedy@worldbank.org Cotonou Country Office
Avenue Jean-Paul II
Rte de la Marina
Cotonou, Benin
Tel: (229) 2130-1777 / 2130-5857
Fax: (229) 2130-1744 / 2130-1216 Mr. Joseph Baah-Dwomoh
Country Manager
Tel: (229) 2131-3564
Email: Jbaahdwomoh@worldbank.org Mr. Nouridine Kane Dia
Economist
Tel: (229) 2130-5857 / 2130-5897
Email: Ndia@worldbank.org |
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