Benin flag Benin: Economic and Political Overview

The economic context of Benin

Economic Indicators

Benin’s strong macroeconomic fundamentals have helped the country achieve robust economic growth despite recent external shocks such as the Covid-19 pandemic and the war in Ukraine. After reaching 6.3% in 2022, GDP growth remained resilient in 2023, slowing down to 5.5% (IMF), fueled by robust agricultural production, an expanding agroindustry sector invigorated by new operations at the Glo Djigbe Industrial Zone (GDIZ), and lively construction endeavors. Economic growth is expected to pick up to an annual average of 6.3% in 2024 and 6% next year, reflecting higher infrastructure spending, increased agricultural output, and a wider regional recovery.

Benin is dedicated to a consolidation strategy, centered around the IMF program, with the goal of decreasing the budget deficit to 3% of GDP by 2025 from 5.5% in 2022. Fitch predicts the budget deficit will decrease to 4.7% of GDP in 2023, 4.1% in 2024, and 3.3% in 2025. The program prioritizes revenue mobilization, aiming to increase tax/GDP by 0.5 percentage points each year. In recent years, the general government debt/GDP ratio has risen, reaching an estimated 53% in 2023 according to the IMF. Projections suggest that debt is expected to decrease to 52.4% in 2024 and further to 51.4% in 2025, bolstered by budget consolidation efforts and GDP growth. Public debt is divided equally between multilateral loans, external obligations, and domestic obligations, and it should stabilize thanks to continued fiscal consolidation and growth (Coface). In 2023, the current account deficit stood at 6.1% of GDP, showing only a slight improvement from 6.2% in 2022. This occurred despite declines in international fuel and food prices and a weakened dollar. Factors contributing to this trend include reduced cotton production and prices, decreased trade volumes with Nigeria and Niger, and increased official imports of fuel, as reported by Fitch Ratings. As per inflation, it was estimated at 5% in 2023, with an expected reduction to 2.5% this year and 2% in 2025 (IMF).

Despite many efforts to reduce it, the poverty rate remains as high as 38.5% according to World Bank data. In 2022, the unemployment rate in the country was estimated at 1.5%. However, the underemployment rate stood at more than 70%, and the informal employment rate at more than 90% (World Bank).

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 17.4419.9421.7923.6325.59
GDP (Constant Prices, Annual % Change) 6.35.56.36.06.0
GDP per Capita (USD) 1,3031,4491,5401,6241,711
General Government Gross Debt (in % of GDP) 54.253.052.451.450.5
Inflation Rate (%) n/a5.02.52.02.0
Current Account (billions USD) -0.98-1.19-1.24-1.22-1.25
Current Account (in % of GDP) -5.6-6.0-5.7-5.2-4.9

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

Benin’s economy is heavily reliant on agriculture. This sector accounts for 26.9% of Benin’s GDP and employs an estimated 28% of the workforce (World Bank, latest data available). The country has fertile land, and a third of Benin’s territory is suitable for agriculture. Around half of the population rely on subsistence farming for their livelihood, whereas cotton is the main crop and the key export commodity. The cotton sector contributes to around 40% of the GDP. Other cultivations include cashew nuts, corn, cassava, yams, beans, palm oil, and peanuts. The 2023 "Aman" paddy crop, constituting 35% of the yearly yield, was harvested and continued until January 2024, as reported by FAO. Production levels were predicted to be above average, largely owing to anticipated high yields. The 2023 maize season concluded last July, with record production reaching 4.7 million tonnes, driven by substantial sowings prompted by strong demand and high prices during planting. The 2023 wheat crop, harvested in April, officially yielded approximately 1.1 million tonnes, close to the average production level.

The industrial sector in Benin is characterized by a range of activities, with key sectors including agro-processing, textile manufacturing, and construction. Agro-processing represents a significant portion of the industrial landscape, with Benin's agricultural resources supporting industries such as palm oil refining, cotton ginning, and food processing. Textile manufacturing, although relatively small-scale, plays a vital role in the economy, leveraging the country's cotton production for fabric and garment production. Construction is another prominent sector, driven by infrastructure development projects and urbanization trends. Emerging sectors include renewable energy and light manufacturing, as the government seeks to diversify the industrial base and attract foreign investment. Overall, the industrial sector is estimated to account for 17% of GDP and 22% of employment (World Bank).

Services (dominated by trade and transport) account for 46.9% of Benin’s GDP and almost 49% of total employment. Benin's services sector encompasses various industries that contribute to the country's economic development. Key sectors include telecommunications, banking and finance, transportation, and tourism. Tourism, though still emerging, holds promise due to Benin's cultural heritage, historical sites, and natural attractions. As the government invests in infrastructure and promotes private sector participation, the services sector is poised for further expansion.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 28.1 22.5 49.3
Value Added (in % of GDP) 26.9 17.0 46.9
Value Added (Annual % Change) 4.8 7.9 6.0

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
59,6/100
World Rank:
100
Regional Rank:
10

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.
 

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Sources of General Economic Information

Ministries
List of Benin's Ministries
Statistical Office
National Institute of Statistics and Demography (INSTAD)
Central Bank
West Africa Central Bank
Stock Exchange
Regional Securities Exchange
Economic Portals
Actu Benin
BBC - Benin profile
 

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Latest Update: April 2024

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