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 have helped the country achieve strong economic growth despite the recent external shocks of the Covid-19 pandemic and the war in Ukraine. After reaching 7.2% in 2021, GDP growth remained resilient in 2022, slowing down to 5.7% (IMF). Economic growth is expected to accelerate to 6.2% in 2023 and 6% in 2024, driven by agroindustry, construction, and port-related activity (IMF). Higher infrastructure spending and a wider regional recovery will support activity (The Economist Intelligence Unit).

In 2022, despite a challenging global and regional context, Benin’s economy remained resilient, supported by
a strong investment push. Investments in the electricity grid and freight transport have driven growth (Coface). In July 2022, a blended 42-month Extended Fund Facility and Extended Credit Facility was approved by the IMF to help Benin address financing needs, support the country’s National Development Plan centered on achieving the Sustainable Development Goals (SDGs), and catalyze donor support (IMF). Reflecting the spillovers of the war in Ukraine, inflation increased from 1.7% in 2021 to 5% in 2022, but remained subdued owing to a strong harvest season and subsidy measures adopted by the government (IMF). Households have benefited from subsidies on agricultural inputs and fuels, as well as from tariff reductions (Coface). According to IMF forecast, inflation is expected to decrease to 1.8% in 2023 and 2% in 2024. Budget deficit decreased only slightly, from -5.7% GDP in 2021 to -5.5% GDP in 2022, as policy remained accommodative to cushion the impact of the repeated shocks (IMF). Consolidation efforts are scheduled to resume in 2023, with a forecast budget balance of -4.3% GDP (IMF). Public debt increased from 49.9% GDP in 2021 to 54.8% GDP in 2022, and it is expected to slowly decrease to 55.6% GDP in 2023 and 54.3% GDP in 2024 (IMF). Public debt is divided equally between multilateral loans, external obligations and domestic obligations and it should stabilise thanks to continued fiscal consolidation and growth (Coface). Around 20% higher than the previous one, the 2023 Budget resumed the consolidation of public finances while allocating substantial resources to critical social and security-related spending. The priorities remain 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.

Despite many efforts to reduce it, the poverty rate remains as high as 38.5% according to World Bank data. In 2021, the unemployment rate in the country was estimated at 1.8% (ILO estimate). However, underemployment rate stood at more than 70%, and 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 29.4% 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 export of raw cashew nuts will be banned in 2024 to promote local processing (Coface).

The industrial sector contributes 17% 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 47.3% 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) 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: February 2024

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