Benin flag Benin: Economic and Political Overview

The economic context of Benin

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Benin’s strong macroeconomic fundamentals helped the country achieve one of the strongest growth rates among developing countries in 2020 (3.8%), despite the Covid-19 pandemic. Economic growth recovered in 2021, reaching an estimated 5.5%, boosted by public investment and the normalization of merchandise traffic at the Port of Cotonou (IMF). According to the IMF estimates, GDP growth should further accelerate to 6.5% in 2022 and 2023. Official Beninese forecasts set economic growth to 7% in 2022 and 7.8% in 2023. Growing coffee and cashew nut output as well as renewed dynamism of Benin's major overseas trading partners will also boost economic growth (The Economist Intelligence Unit).

In 2021, Benin’s economy recovered from the slowdown induced by the coronavirus crisis, thanks to the government’s swift response, a strong public investment push and the establishment of a sanitary belt around the cities most exposed to the pandemic (IMF). To fight the coronavirus crisis, Benin’s government set a recovery plan estimated at FCFA 74 billion (1% of the country’s GDP), aimed toward the most vulnerable households, and the companies operating in the most affected sectors (tourism, transportation, etc.). The country also benefited from emergency financing (USD 178 million), and general SDR allocation (USD 168 million) from the IMF. Falling revenues and increased expenditures caused the public deficit to widen to 6.5% GDP in 2021 (Benin Ministry of Economy and Finance). Fiscal consolidation efforts are expected to reduce the deficit (grants included) to 4.5% GDP in 2022 and 3.5% GDP in 2023 (Benin Ministry of Economy and Finance). Public debt reached an estimated 52.3% GDP in 2021, and is projected to decrease to 48.9% GDP in 2022 and 46.3% GDP in 2023 (IMF). Aggregate inflation remained subdued (3% in 2020 and 2021) but food prices increased sharply, reflecting both global factors and domestic weather events (IMF). Inflation rate is expected to decrease to 2% in 2022 and 2023 (IMF). Beninese authorities have requested a new IMF-supported program to facilitate the implementation of the national development plan. Among the priorities of the 2022 budget are the promotion of high-potential sectors such as agriculture, tourism and digital economy; the development of key transport, energy and sanitation infrastructure; the reduction of poverty and social vulnerability; and fiscal consolidation. The authorities have also revamped their vaccination strategy, as less than 4% of the population was fully vaccinated at the end of 2021.

Despite many efforts to reduce it, the poverty rate remains as high as 45.9% according to World Bank data. In 2020, the unemployment rate in the country was estimated at 2.5% (ILO estimate). However, underemployment rate stood at more than 70%, and informal employment rate at more than 90% (World Bank). 

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 14.3915.67e18.0719.9221.84
GDP (Constant Prices, Annual % Change) 6.93.8e5.56.56.5
GDP per Capita (USD) 1,2181,2911,4471,5511,655
General Government Gross Debt (in % of GDP) 41.246.152.348.946.3
Inflation Rate (%) -0.93.0e1.74.61.8
Current Account (billions USD) -0.58-0.62-0.72-0.85-0.97
Current Account (in % of GDP) -4.0-3.9e-4.0-4.3-4.4

Source: IMF – World Economic Outlook Database, October 2021

Note: (e) Estimated Data

Main Sectors of Industry

Benin’s economy is heavily reliant on agriculture. This sector accounts for 27.1% of Benin’s GDP and employs an estimated 38% of the workforce (World Bank, latest data available). The country has a fertile land, and a third of Benin’s territory is suitable for agriculture (World Bank). 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 40% of the GDP. Other cultivations include cashew nuts, corn, cassava, yams, beans, palm oil, and peanuts.

The industrial sector contributes 16.3% of GDP and gives employment to roughly 18% of the active population. Textiles, food processing, construction materials, and cement are the main sub-sectors.

Services (dominated by trade and transport) account for nearly 48% of Benin’s GDP and almost 43% of total employment.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 38.3 18.3 43.4
Value Added (in % of GDP) 27.1 16.3 47.9
Value Added (Annual % Change) 1.8 5.2 4.9

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 Economic Analysis (INSAE)
Central Bank
West Africa Central Bank
Stock Exchange
Regional Securities Exchange
Economic Portals
Actu Benin
BBC - Benin profile
 

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Latest Update: July 2022

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