Recent Developments & Prospects
Economic Cooperation, Regional Integration & Trade
Economic & Political Governance
Public Sector Management, Institutions & Reform
Natural Resource Management & Environment
Thematic analysis: Structural transformation and natural resources
Authors: Daniel Ndoye, El Hadji Fall
- Driven by agriculture and trade, real GDP growth is estimated at 5.0% in 2013, down from 5.4% in 2012.
- Reforms have continued in public finances and in the port sector, but a clear national strategy remains to be defined for managing the cotton sector.
- Global value chains (GVCs) are embryonic in Benin, but some activity sectors maybe integrated into them provided the constraints weighing on the private sector are eased.
After having risen from 3.5% in 2011 to 5.4% in 2012, real gross domestic product (GDP) growth is estimated to have been secured at 5.0% in 2013, confirming a trend towards recovery. Economic activity has been fuelled in particular by: i) an increase in agricultural production due both to incentives to farmers and to the reinforcement of the regulatory framework for agricultural production and the distribution of inputs; and ii) an increase in port traffic following port modernisation measures. The impact of growth on poverty reduction remains, however, insufficient. Inflation, estimated at 2.6% in 2013, returned below the 3.0% threshold set by the West African Economic and Monetary Union (WAEMU) after having been exceptionally high in 2012 (6.6%) because of Nigeria’s reduction in subsidies of fuel prices. Growth is projected at 4.9% in 2014 and 5.3% in 2015 thanks to the vigour of the agricultural and the port sectors and to the entry into production of a new cement plant and a number of agricultural processing units.
Macroeconomic stability should be strengthened by the ongoing reforms, particularly in the agricultural and port sectors and in public finances. It is, however, crucial to develop, in consultation with all the stakeholders, a clear strategy to achieve sustainable management of the cotton sector in order to ensure its maximum profitability; the sector provides a source of income for one-third of the population. To support growth in Benin and reduce poverty incidence, there are also major stakes in developing the private sector, which is largely dominated by the informal sector. In this respect, in addition to ongoing efforts to make the business climate better and facilitate access to funding, public-private sector dialogue should be improved and investor confidence strengthened by implementing the recommendations of the round table on the development of the private sector held in October 2012.
The private sector is in fact in a good position to exploit the country’s potential, notably agricultural, to the full, and its development is essential for Benin’s integration into global value chains (GVCs). Although GVCs are embryonic in the country, certain activity sectors could be integrated into them, provided they are structured through appropriate policies. These include in particular: the cotton-textile industry, with market opportunities in West Africa; the cashew-nut, maize, rice and pineapple subsectors; tourism, with the development of tourist areas based on public-private partnerships (PPPs); and transport, with the establishment of a multi-modal hub to optimise the country’s position as a trade corridor (modernisation of the port of Cotonou with dry ports, construction of the Glo-Djigbe airport, Cotonou-Niamey railway).
Table 1: Macroeconomic indicators
|Real GDP growth||5.4||5||4.9||5.3|
|Real GDP per capita growth||2.7||2.3||2.3||2.7|
|Budget balance % GDP||-1.3||-1.2||-1.1||-1.2|
|Current account balance % GDP||-8.5||-8.2||-7.9||-7.8|
Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.