Country FilesWestBENIN | Growth: positive indicators


Posted on Thursday, 05 July 2018 15:40

BENIN | Growth: positive indicators

Cotton production for the 2016-2017 crop year was estimated at 450,000 tons
Record cotton harvests, economic recovery in Nigeria, a healthy building and public works sector… There are an increasing number of positive signs that indicate that Benin’s economy began picking up again in 2017. This economic dynamic is being driven by “Revealing Benin” (Benin Révélé), the ambitious Government Action Programme (GAP) financed by the IMF

For several months now, Benin’s economic indicators have, one by one, been going from red to green, a positive sign despite growth declining from 6.5% in 2014 to 4% in 2016. However, Nigeria, the neighbouring giant that influences much of Benin’s economy, is undergoing a return to growth; Benin’s power cuts are nothing more than a bad memory, and cotton, the country’s main export, is about to achieve its second consecutive record harvest.
These favourable conditions, combined with the implementation of the 2016-2021 Government Action Programme (GAP), “Revealing Benin” (see box, page 7), will enable a recovery in economic activity: growth should reach 4% in 2017 and 6% in 2018. The GAP, with a budget of €13.78 billion over five years, plans to increase the investment rate from 18.8% to 34%.6% growth forecast for Benin in 2018

Low oil price
Inflation will remain limited because of low oil prices and good prospects for agricultural production. The budget deficit, which worsened between 2013 and 2015, was reduced to 6.2% of GDP in 2016, due to the savings made by the new government. The public debt rate was 48% in 2016, of which 22.1% was foreign debt.
The risk of over-indebtedness remains low, although the “moderate” risk margin has weakened in recent years, according to the World Bank. This is the reason the government suspended 18 of the 22 pre-financing agreements for transport projects that had been signed by the previous government, reducing their amount from 24% to 4% of GDP between March and December 2016.

Cotton managed by the private sector
The agriculture sector, driven by cotton, accounted for 23.5% of GDP in 2016. Cotton production has been estimated at 450,000 tons for the 2016-2017 crop year against the 260,000 tons harvested during the previous season, which shows that government efforts have paid off. The State has restored management of the cotton industry to the private sector, under whose management it had been until it was placed under state management in 2012. The 2017-2018 harvest should once again be an excellent one for the cotton sector and future production is estimated at between 500,000 and 550,000 tons. Food crop production has improved as a result of growing climate-resilient crops, an expansion of cultivated area and better rainfall.

Dynamic building and public works sector
The secondary sector, which accounts for 24.6% of GDP, is still dominated by cotton ginning and artisanal farm produce processing units. The sector took a knock after the fall in seed cotton production in 2015 but is set to benefit from the record harvests achieved in the seasons that followed.
The anticipated support for new farm product processing businesses and the transition of informal businesses to the formal sector will contribute to the gradual industrialisation of the economy. The secondary sector has seen a slight improvement since 2012 due to building and public works. This sub-sector was stimulated by the construction and rehabilitation of major roads, and the construction of housing and large hotels in Cotonou, such as the Golden Tulip, which opened last summer, and the Marriott and Noom hotels, currently under construction. The GAP projects will sustain this trend, including in the energy sector where investment is expected to increase.

New tech horizons
The decline in re-exports from Benin to Nigeria has had a negative impact on the tertiary sector, which accounts for nearly 51.9% of Benin’s GDP. However, trade is expected to pick up again as Nigerian growth resumes. On the other hand, the sector is benefitting from the dynamism of the other activities, especially information and communication technology (ICT).

 “Revealing Benin” the huge government investment plan

In December 2016, the government launched “Revealing Benin”, a five-year development and investment plan with a budget of 9,039 billion CFA francs, or €13.78 billion. It aims to boost the investment rate to 34% of GDP against the current 18.8% through increased collaboration with private sector partners, from which it expects a 61% stake in its financing.

“Revealing Benin” is based on 45 development projects, 95 sectoral projects and 19 institutional reforms. In order to “sustainably launch Benin’s economic and social development,” the programme focuses on projects that promote sustainable growth.

“Revealing Benin” has designated nine strategic sectors: tourism, agriculture, infrastructure, digital, electricity, living environment, Sèmè City (Research & Development), drinking water and social protection. More than 500,000 direct and indirect jobs will be created.


From the June 2018 supplement to The Africa Report, INVESTING BENIN


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