Benin – Economic Overview

Benin’s Government Boosts Debt-Fueled Economy

Published: 08 April 2019

1. Economic development: Increasing momentum

Benin currently enjoys a dynamic economy. The Economist Intelligence Unit forecasts a GDP growth of 6.2% in 2019, and 6.5% is expected for 2020. This is significantly higher than it has been until recently, when a growth rate of only around 4% has been achieved. It is uncertain whether this is a sustainable trend, as the expansion is largely due to debt-financed infrastructure projects.

Increases in production in the cotton sector – triggered by a restructuring of the sector conducted by the government – are also having a positive effect on the economy. The target for 2018-19 is a record harvest of 700,000 tons. Further development will depend primarily on the world market price of the raw material. Slightly improved economic conditions in neighboring Nigeria, where a recession occurred in 2016, is also helping. Benin’s economy usually suffers if there is a crisis in Nigeria, as many goods departing the port of Cotonou are destined for this market.

President Patrice Talon, who has been in power since 2016, is having a strong influence on economic performance. The former businessman is pursuing a neoliberal economic policy characterized by liberal reforms. However, his policy measures are not always seen as business-friendly. Some foreign investors complain about repressive measures and a rude tone taken by the government.

Benin’s development is viewed positively by international donors, as shown by its inclusion in the G20’s “Compact with Africa” initiative. This could lead to further economic aid. The donor organizations are already very active in Benin in areas such as agriculture, water and energy supply, having an important effect on the economy.


Benin: Economic data

2017 2018 1)
GDP growth (%) 5.6 6.0
GDP (nominal, US$ billion) 9.3 9.9
GDP per capita (US$) 830.4 1) 966.4
Population (millions) 11.2 11.5
Exchange rate (annual average, 1 Euro = x CFA franc) 2) 656.0 656.0

1) Estimates 2) CFA franc exchange rate is pegged to Euro

Sources: IMF, Economist Intelligence Unit


2. Investments: Government is spending significant amounts on infrastructure

Investment activity by the government has recently been high. However, increasing public debt is delaying infrastructure projects. The government is trying to attract foreign donors or private investors for its projects. Planned measures are listed in the Programme d’actions du Gouvernement (PAG,, initiated in 2016 and running until 2021. It is unlikely that all projects are going to be implemented, but the program reflects the government’s priorities.

Among the largest projects proposed are the expansion of the port of Cotonou and the construction of a new airport. In addition, there will be substantial investment in asphalting roads in Benin’s cities and in the development of energy and water supplies. But little is happening in the private sector. Investments are still being made in the construction of apartments, hotels and offices in the greater Cotonou area, but the willingness to invest has declined compared to previous years.


Benin: Selected major projects

Project Investment (in US$ million) Status Comment
New airport Glo-Djigbé (Cotonou) 500 Planned Aviation Industry Corporation of China (AVIC), supported by Aéroports de Paris Ingénierie (ADPI). Financed largely by the Chinese government.
Benin Power Compact (MCC) 332.6 Active since 2017 US donor MCC providing the funds for the restructuring of the electricity sector and improvement of the electric infrastructure.
Projet d’aménagement du barrage hydroélectrique d’Adjarala (PABHA) 239 Planned since 2009. Project delayed several times since then. China Eximbank assured financing in 2016. Sinohydro will be in charge of the construction of the 147 MW hydropower plant.
Thermal power plant Maria Gleta 163 Under construction. Start of operations is scheduled for the 1st half of 2019. Capacity 127 MW, construction by the Danish BWSC. MAN Diesel & Turbo supplies the turbines. The power plant will be expanded to 400 MW at a later stage.
Port expansion in Cotonou Not specified Preparatory work and studies. Deepening of the mole is planned. Project will be accompanied by Port of Antwerp International (PAI). PAI is responsible for operations and port expansion since 2018.
Port pétrolier-minéralier et commercial en eau profonde Not specified Planned New port east of Cotonou in Sèmè-Kpodji. Public-private partnership (PPP) with Pic Network (financing), a subsidiary of Petrolin.

Source: Global Markets International research


3. Consumption: Remains modest despite healthy economic growth

The consumer climate is currently classified as moderate. The high economic growth is largely due to the expansion of the infrastructure and has only a minor impact on the purchasing power of the population. With a per-capita income of only US$ 960 per year, the majority of the Beninese population remains in poverty.

Due to the high population growth of more than 300,000 people per year, the demand for consumer goods will increase steadily in the future. Most products such as food, hygiene and household articles and motor vehicles have to be imported. Retail is dominated by open markets such as the Dantokpa market in Cotonou. In addition, there are a small number of air-conditioned supermarkets for the middle class in the capital, such as CKDo in the Erewan shopping center.


4. Foreign trade: Benin is a small market

Benin is a small sales market, even by African standards. Companies which are already active in West Africa would do well to keep an eye on the country. Products that are successfully sold in Ghana, Côte d’Ivoire or Nigeria could also see demand in Benin. In addition, the country is used as a logistics hub for transport to Nigeria, Niger and Burkina Faso. The planned port expansion in Cotonou should strengthen this function as a hub in the future.


Benin: Foreign trade (estimates)

2017 (US$ million) 2018 (US$ million) Change 2018/17 (%)
Imports 2,877 3,080 7.1
Exports 2,078 2,360 13.6
Trade balance -799 -720

Source: Economist Intelligence Unit


5. SWOT-Analysis Benin

Strengths Weaknesses
Limited currency risk, as CFA franc is pegged to EUR

Cotonou is a possible regional hub thanks to central location in West Africa

Business-friendly government since 2016

Security situation is satisfactory

Corruption and cronyism

French companies are dominant

Small market with only 11.5 million inhabitants

Limited purchasing power of population, income per capita only US$ 960 per year

Opportunities Threats
Public infrastructure projects, often financed by international donors

Growing population demands more consumer goods

Expansion of electricity infrastructure

Erratic behavior of government

Unclear property rights, therefore buying real estate is risky

Risk of delays or shortfalls of payments, especially high with government agencies