APA-Cotonou (Benin) With rational management of public spending and growing economic potential, Benin is overcoming the crisis related to the Covid-19 pandemic, which offers the country a stable outlook.

Benin enjoys political stability. This climate has allowed the State to deploy over the years its Government Action Plan (PAG), bringing together large-scale development programs, in response to the challenges of economic growth.

Thanks to massive investments, Benin is positioned in the category of middle-income countries with a Gross Domestic Product (GDP) of 6.4%. But, this growth should, because of Covid-19, be 3.2% in 2020 where several countries in the world are in recession, according to an information note received to APA.

This is despite the fact that the country is heavily dependent on informal re-export and transit trade with Nigeria (estimated at about 20% of GDP) as well as agriculture (70% of GDP), including cotton, the main export product.

The country has shown stable and robust growth for two decades. However, poverty remains widespread with a low level of growth per capita estimated according to the World Bank at an average of 1.5% over the period 2008-2018.

"The national poverty rate stood at 38.2% in 2020 compared to 40.1% in 2015." Resilient, with a LESS IMPACTED GDP (+3.2%), Benin occupies the first place in the West African Economic and Monetary Union (WAEMU) area.

Reform of the state apparatus

The Government Action Plan (PAG) has made it possible to reform state governance. The vision, driven by Patrice Talon, led the  International Monetary Fund (IMF) to award a rating with the mention "very good" to Benin for its management of public finances.

The business environment has experienced a qualitative leap, giving the country 76th place in the Logistics Performance Index and 149th out of 190 countries in the Doing Business ranking of the Global Bank on Business Regulation.

The Head of State Patrice Talon envisages, in the current economic context, to finance the actions of the government from the country's own funds in order not to explode the external debt, in the face of the global economic slowdown linked to the Covid-19 pandemic.

With this in mind, the government has undertaken nearly fifty reforms, the scheduling of which will be followed by the Beninese Minister of Economy and Finance, Romuald Wadagni, distinguished "best minister in Africa" by the Financial Afrik awards.

These reforms should make it possible to create regional growth poles, decentralize investments, promote access to drinking water and electricity, rationalize fiscal policy and access to credit and public procurement.

They also aim to improve banking, procedures for obtaining land titles and building permits, rationalize state revenues, fight corruption, and create a one-stop shop for cross-border trade procedures.

Growing potential

Benin has made progress in terms of business creation and electricity connection, an indicator welcomed by the World Bank. The State has increased investment in the primary sector, but wants to achieve the challenge of modernising agricultural sectors.

The industrialization of sectors with high growth potential is on Patrice Talon's agenda, which wants to bring added value to the various sectors, both in the primary, secondary and tertiary sectors with a view to balanced and sustainable development.

Socio-economic infrastructure, technological innovation and the digitalization of processes are an essential link in the Government Action Plan. And this, with a view to a structural transformation of the economy.

The valorization of the energy mix is a priority for the State. The connection to the electricity grid of a new power plant has increased the electrification rate from 46.6% to 55.1% between 2015 and 2020, a rate that the government intends to raise in the coming years.

Benin experienced strong economic performance between 2016 and 2019 with an average real GDP of 5.5%. But, since August 2019, the decision of Nigeria, its main economic partner, to close its land borders with its neighbors has dealt a blow to the country's economy .

Despite relative resilience, Benin's economic activity decelerated to 6.4% in 2019 from 6.7% in 2018 (representing a GDP per capita growth rate of 3.5%). Re-export operations of Nigerian products contribute nearly 20% to GDP.

Stronger economic diversification, smarter management of public spending and a more equitable geographical distribution of resources would, according to the Global Bank, lower the poverty rate and make growth more inclusive.