International Trade in Benin

News Related to International Trade in Benin

Business outline for Benin

Economic Overview

The economic crisis had a significant impact on the Benin economy. The growth rate fell from 5% in 2008 to 2.5% in 2009 and remained weak in 2010, reaching 2.8%. The country's weak performance, compared to the other UEMOA (West Africa Economic and Monetary Union) countries), is due to its great susceptibility to external economic shocks (especially the drop in the Nigerian demand). Mid-term economic perspectives are nonetheless relatively good, given that the economic recovery should turn out to be more dynamic in the coming years. The country's economic growth is driven by trade and investments, and is sustained by development aid.

In the context of slow economic recovery, Benin asked the IMF for a new three-year accord (2010-2013) as part of the Extended Credit Facility framework. Maintaining debt sustainability and public finances, as well as improving the external competitiveness of the country are considered essential. The country should increase investment in infrastructure, limiting non-priority public spending and accelerate structural reforms. The structural reform program is aimed at increasing revenue mobilization, improving the management of public finances and reforming the civil service and privatize public utility companies.

Dependence on energy resources from neighboring countries could present a problem. Corruption, bad management, vulnerability related to commodity prices and the rapid growth of the population are major hindrances to the country's growth.

Benin remains one of the poorest countries in the world. Informal and family employment is significant and more than a third of the population lives under the poverty threshold.

FDI in Figures

Since 1990, most of the foreign investments made in Benin have been through acquisition of interests in privatized companies. Many infrastructure projects are funded by grants or loans from the World Bank or other international development banks. Due to the economic crisis, FDI in-flow, which was increasing in recent years, has slowed down since 2008 and remains weak.

Unmotivated and corrupt officials, poor infrastructures and electricity supply problems limit the country's potential attractiveness.

Benin's strong points are its strategic location near a potential market of 200 million inhabitants, its role as a trade hub for second-hand vehicles imported from Europe and resold in all Western Africa, and the fact that it is one of the most democratic nations on the African continent. Benin has taken several initiatives to attract foreign investment (particularly in the electricity generation sector), like creating a Presidential Investment Council.

Benin's main foreign investor countries are France and other European countries, and Canada.

Foreign Trade Overview

Benin is open to foreign trade (trade represents 40% of the GDP), and is a member of different commercial organisations: WTO and UEMOA (West Africa - website in French).

For years, Benin has been showing a structurally negative trade balance, and the trend is expected to continue. This is mainly due to the country's low exports and its high dependence on imports, especially in oil and electricity supplies.

Benin mainly exports cotton, cashews, shea, textile products and seafood to China, Japan, India, Niger, Nigeria and Togo. The main import products are foodstuffs, petroleum products and capital goods from China, the United states, Thailand, France and Malaysia. The main trade partners are ECOWAS member countries, China and France.