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Benin's Economic Outlook: Growth & Challenges 2024

9 January 2024

In this article, we will take an in-depth look at the economic outlook of Benin for the year 2024. In recent years, the country has made significant progress in developing its economy, but it still faces many challenges. We will discuss the country’s growth prospects, challenges, and forecasted trends. 

Key facts about Benin’s economy:

  • GDP: $17b (2021) 
  • GDP per capita: $1,319 (2021)
  • GDP growth: 6% (2022), 6,2% (2023), 6% (2022)
  • Budget deficit (% of GDP): 5.2% (2022), 4.7% (2023), 4.1% (2024)
  • Imports: fuel, food and capital equipment
  • Importing partners: France (18%), China (15%), Togo, Ghana, Belgium and United Kingdom
  • Exports: cotton, cocoa, maize and seafood
  • Export destinations: Nigeria (21%), China (20%), India, Chad, Ghana, Thailand, Togo and Indonesia
  • Main investors: France, India, China, Nigeria and Cote d’Ivoire
  • Credit ratings: B+/ Positive (Fitch), B+/ Positive (S&P), B1/ Stable (Moody’s)
  • IMF Programme? Yes. Will provide funding of $638m

Understanding Benin's Economic Landscape

Benin has four main economic sectors:

Agriculture

The agriculture sector accounts for over a third of Benin's GDP and employs nearly 80% of the population. Benin is the leading producer of cotton in Africa and in the top 10 globally. The government's efforts to promote agribusiness and diversify the sector through increased investment in irrigation facilities, mechanisation, and better access to markets, have resulted in an increase of agricultural exports. 

Key commodities: cotton, cocoa, cashews, palm oil, and fisheries

Manufacturing

The government has been actively encouraging private investments in this sector via the Investment and Export Promotion Agency (APIEx) whose role is to promote investment and exports, and provide business intelligence and economic intelligence to investors. Measures such as the establishment of industrial parks, reducing customs duties on raw materials, and financial support for small and medium-sized enterprises have made the sector more competitive.

Key products: textiles, processed foods and construction materials

Services

The services industry in Benin has been growing rapidly, driven by an increase in tourism and the government's investment in infrastructure. The country's efforts to upgrade the airport, seaports, and road networks have resulted in greater accessibility and improved opportunities for investment. The tourism industry has seen a steady increase, with the expansion of ecotourism, cultural tourism, and leisure tourism activities. 

Tourism

Benin has great potential for tourism with its diverse range of cultures, traditions, and landmarks. Despite the COVID-19 pandemic's effects, the past year saw significant growth in the tourism industry, with an increase in visitors to historical sites, national parks, and beaches. Benin is gradually becoming a top ecotourism destination, with the government's increasing support for eco-friendly tourism. 

Tourism statistics: 325,000 (2020)

La Porte du Non-Retour (The Door of No Return) in Ouidah, Benin. It is one of the most visited tourist sights in the country.
La Porte du Non-Retour (The Door of No Return) in Ouidah, Benin. It is one of the most visited tourist sights in the country.

Benin's GDP Growth Forecast

In 2024, Benin's gross domestic product (GDP) growth is expected to continue on an upward trajectory, driven by various factors. 

  • Government policies: The government's continued focus on economic reforms and investment in key sectors, such as infrastructure, agriculture, and services, is expected to boost economic growth. The government has implemented initiatives such as tax incentives, simplified procedures and support for public-private partnerships.
  • Investments: The influx of both domestic and foreign investments into the country is expected to increase, creating new business opportunities and boosting economic growth. Foreign investment is particularly welcomed in the power industry, with the country aiming to improve its energy infrastructure. Other infrastructure needs include the constriction of roads, bridges and airports. Recent investments: the 1,950km crude oil pipeline running from Niger to Benin, which will cost $7b and is financed by China National Petroleum Corporation; and the €160 million renovation and extension of the port of Cotonou by 2027 won by a consortium led by French-firm, Eiffage.
  • International trade: The country's strategic position in the region and its membership in various trade agreements are expected to drive export growth, creating more opportunities for economic expansion.
  • Labour market: The labour market in Benin Republic is characterised by low levels of education, low productivity, and a high rate of informality. However, the cost of labour is relatively low compared to other West African countries. 
  • Other factors: Other factors that shape the business environment in Benin Republic include a sizeable youth population, a developing financial sector, and a growing middle class.

Economic Challenges Ahead

Despite the projected growth of the Benin economy, the country continues to face numerous challenges that hinder its progress. One of the critical challenges is the inadequate infrastructure. Benin lacks adequate transportation, water, and sanitation systems that are crucial for economic development. The poor infrastructure also affects the distribution of goods and services, making it difficult for businesses to operate efficiently.

Secondly, unemployment remains a significant challenge in Benin. The country has a high rate of youth unemployment, resulting in significant social and economic problems. The lack of jobs not only affects young people but also leads to lower economic growth and increased poverty levels.

Another challenge that Benin faces is corruption. Corruption undermines the government's efforts to promote economic development and investment. It discourages foreign investment and creates an environment where businesses cannot thrive. Corruption also leads to the mismanagement of resources and public funds that could be used for development.

The Benin government needs to address these challenges to achieve sustained economic growth. It cannot afford to ignore them, and they require a concerted effort to overcome. Nevertheless, with the right policies, meaningful investment, and supportive international partnerships, Benin has the potential to overcome these challenges and achieve its economic goals in the long run.

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