Benin’s economy relies heavily on informal re-export and transit trade with Nigeria and on agricultural production. The service sector accounts for about 50% of GDP and agriculture employees between 45% and 55% of the population and contributes about 25% of GDP. According to World Bank real GDP growth was 4.0% in 2016. 2.1 % in 2015, 6.4% in 2014, 7, 2% in 2013 and 4.8% in 2012 and is projected to reach 5.4% in 2017. The key drivers for economic performance include exports of agricultural produce including cotton, improvements at the Port of Cotonou, and developments in telecommunications. Industrial production growth will accelerate to 7.2% in 2017, from 4.2% in 2016. Inflation is estimated at -0.8% for 2016 and is projected to remain under 3% in 2017.
Why invest in Benin?
- The government is committed to attracting investment to support the economic development.
- It is the main gateway to Nigeria for over 300 million people;
- The proximity of the Port and Airport of Cotonou, and finalized plans to build a second international airport and a deep sea port;
- Immediate availability of production factors: several interconnection projects are being finalized.
- Reduced formalities with a beneficial Investment Code.
- Significant customs and tax benefits are available on the Industrial Free Zone and developed industrial zones.
- A favourable political context with emphasis on good governance.
- A legal environment constantly strengthened.
- A steadily growing economy.
- The availability of skilled labour.
Benin held peaceful, democratic presidential elections in March 2016 that were won by the multi-millionaire and cotton sector tycoon, Patrice Talon. The new government is that was sworn in April 2016 is focused on economic development of the country. The government plans to attract private investment to support the economic growth.
In 2017 Benin had an estimated population of 11.2 million with a growth rate estimated at 2.75% per year and about 40% live below the poverty line of less than US$ 1.90 per day. Over 60% of the population is aged 25 years and below.
About 44% of total population in 2015 lived in urban areas with estimated urbanisation annual rate change of 3.67% for the period from 2010 to 2015.
The highlights of World Bank score of doing business in Benin are summarised as follows;
|Topics||World Bank 2017 Rank||World Bank 2016 Rank||Change in Rank|
|Starting a Business||57||117||
|Dealing with Construction Permits||74||74|
|Protecting Minority Investors||145||145||–|
|Trading across Borders||133||130||
The government is the in process of creating conducive environment for doing business.
Benin is a member of the West African Economic and Monetary Union (WAEMU). Benin’s currency is the CFA Franc, issued by the Central Bank of West African States (BCEAO). The CFA Franc is fixed to the Euro at CFA 655.957/Euro. The currency exchange rate as of March 31 is approximately CFA Franc 580/USD. Foreign exchange is readily available. There are no restrictions on the remittance of profits by companies that invest in Benin. Remittance of profits by individual resident investors is not restricted.
Benin is a member of the Organization for the Harmonization of African Business Law (OHADA) and has adopted OHADA’s Universal Commercial Code (codified law) to manage commercial disputes and bankruptcies. Benin is also a member of OHADA’s Common Court of Justice and Arbitration and the International Center for the Settlement of Investment Disputes (ICSID). A new commercial section at the Court of First Instance in Cotonou is responsible for expedited settlement of business-related disputes.
Key development challenges
- The economy is affected by adverse weather conditions, terms of trade shocks, and developments in Nigeria.
- About 80% of Benin’s imports and 25% of the export are with Nigeria via informal cross-border trade. This negatively affecting its fiscal policy.
- The country faces corruption challenges.
- The country is also faced with the challenges of urbanisation
Benin ranked number 95 least corrupt nation out of 175 countries and scored 36 points out of 100 on 2016 Corruption Perceptions Index reported by Transparency International.
The general security situation is quite fine but one has to be careful of personal security especially when travelling alone. You are advised to seek security advice from Police in case you are not sure.
Unemployment and skilled labour
Update information not readily available
Attitude to Foreign Direct Investment
The government is focused on attracting foreign investment to support the economic growth of the country. The Investment and Exports Promotion Agency (APIEX) provides one-stop- shop for starting business, investment promotion and foreign trade promotion. The Benin Investment code provides for;
- Equal treatment of companies, regardless of their legal status or nationality.
- Tax concessions
- Commercial freedom
- Freedom of movement
- Managerial freedom
- Free transfer of capital (in the form of profits and value according to the legislation in force)
- Assurance that the Government of Benin will take no action of nationalization or expropriation of investments without compensation
Restrictions on Foreign investment
The government does not limit foreign ownership or control and encourages joint venture partnerships with local people. The law guarantees freedom of commerce; choice of customers and suppliers; free movement throughout the country; the right of foreign employees and their family members to leave the country; and freedom from government interference in the management of private enterprises.
Intellectual Property (IP) Rights.
Benin has a legal framework that can be used to enforce IPR and the country is also a signatory to both World Intellectual Property Organization Internet treaties. But enforcement of the legal framework is constrained by limited capacity of the country.
Offshore oil deposits, limestone, marble and timber
Information about Investment climate in Benin has been summarized to include the following;
- Development Partners of Benin
- Double Tax Treaties of Benin
- Exports of Benin
- International Trade Agreements with Benin
- Investment Authority of Benin
- Investment Guarantees in Benin
- Investment Incentives in Benin
- Investment Opportunities in Benin
- Natural Resources of Benin
- Trading partners of Benin
- Shipping Status
- BRVM Regional Stock Exchange
Sources of information