Benin's geographic position at the intersection of two important regional corridors - the Abidjan-Lagos corridor and the Cotonou-Niamey corridor - makes it an important commercial and tourism crossroads. Benin has a 121-kilometer coastline along the Gulf of Guinea and shares borders with Nigeria, Burkina Faso, Niger, and Togo.
Political situation
Benin enjoys a stable political situation with successive democratic transitions. On January 8, 2023, parties supporting incumbent President Patrice Talon won legislative elections, securing 81 of the 109 seats in the National Assembly. The main opposition party, the Democrats, won 28 seats. The Beninese opposition thus returned to parliament after a four-year absence. The reform of the party system in September 2018 forced political parties and movements to merge while others were unable to present candidates in the legislative elections. The next general elections are scheduled for 2026 and will be governed by a new electoral code adopted by MPs on March 5, 2024.et validated by the Constitutional Court.
Social Context
The population was 13.35 million in 2022 with a fertility rate of 5.7 children per woman and a life expectancy of 61.2 years. In 2021/22, the national poverty rate stood at 36.2%, down 2.3 percentage points compared to 2018-2019, with an unemployment rate of 2.4% but an underemployment level of 72% and 90.1% of the workforce was employed in the informal sector.
The United Nations Human Development Index (HDI) ranking of the country remains low, although it has improved over time. In 2020, Benin was ranked 166th out of 191 countries with an HDI of 0.525, due to low life expectancy at birth (59.8 years), a low number of expected and average years of schooling (10.8 years and 4.4 years respectively). Similarly, while progress has been made in education and health, Benin's 2020 Human Capital Index remains low at 0.40.
Several international and regional socioeconomic shocks could affect the poverty reduction trend. The impacts of WAEMU sanctions against neighboring Niger, the consequences of the Russian invasion of Ukraine, political instability in neighboring Sahel countries, growing insecurity and social tensions in the North could lead to sustained food, energy and fertilizer price volatility that would negatively impact poor and vulnerable households, slowing poverty reduction and pushing more households into fragility.
Economic situation
Growth remained strong in 2023 and the first two quarters of 2024, supported by buoyant industrial and agricultural production, as well as resilience in services. Despite the persistence of shocks, notably the closure of the border with Niger and economic difficulties in Nigeria, such as strong inflationary pressures and the depreciation of the Naira against the CFA franc, economic activity grew by 6.3% and 6.6%, respectively, in the first and second quarters of 2024. Inflation, which had doubled in 2023, has decreased, reaching 1% in July 2024 (year-on-year).
The continued increase in revenue has resulted in a significant decrease in the fiscal deficit from 5.5% of GDP in 2022 to 4.1% in 2023. With the implementation of the medium-term revenue mobilization strategy, fiscal consolidation, led by revenue mobilization, should allow for the gradual reduction of the fiscal deficit and achieve the regional convergence criterion of 3% of GDP by 2025. The debt level stabilized at 54.5% in 2023. The continued decline in the fiscal deficit coupled with active debt management contributed to maintaining debt sustainability. Benin is at moderate risk of debt distress.
Development Challenges
Thanks to its solid commitments in terms of macroeconomic stability since 2016, the State has been able to count on fiscal space to support economic activities during the pandemic. Continued economic recovery will hinge on its ability to address the fragilities associated with its growth model. Indeed, the economy is dependent on exports of unprocessed agricultural products (cotton, cashew nuts) and the re-exportation of imported goods and commodities (used cars, rice, etc.) to Nigeria. Nearly 85% of the workforce works in the informal economy. Domestic revenue mobilization remains among the lowest in WAEMU despite steady progress since 2020. The short-term outlook is dependent on the uncertainties of the geopolitical context, particularly in the northern regions, as well as the turmoil in neighboring countries.
Last Updated: Oct 07, 2024
