BENIN

COUNTRY OVERVIEW

LOCATION AND SIZE.

Benin is a slim, rectangular country situated in West Africa. Benin has a narrow 100-kilometer (62-mile) coastline along the Bight of Benin, in the Atlantic Ocean. The country is bordered to the west by Nigeria, to the north by Niger and Burkina Faso, and to the east by Togo. Benin has a land area of 112,622 square kilometers (42,985 square miles), making it slightly smaller than the state of Pennsylvania. Both the capital, Porto-Novo, and Cotonou, the largest city, are located on the coast in the southeast of the country.

POPULATION.

The population was estimated at 6.4 million in mid-2000. The relatively high population growth rate of 3.3 percent from 1992 to 1996 has led to a young population age profile, with 47 percent below the age of 15, 50 percent aged between 15 and 64, and only 3 percent 65 and over. The birth rate was 45 per 1000 in the year 2000, and the death rate was 15 per 1000.

The principal ethnic groups are the Fon (42 percent), the Adja (15.6 percent), and the Yoruba (12.1 percent) in the south, and the Bariba (8.6 percent), the Otamari (6.1 percent), and the Peulh (6.1 percent), who live further north. Some 40 other groups are identifiable. Around 70 percent of the population follow traditional indigenous beliefs, 15 percent are Muslim, and 15 percent Christian.

Roughly 38 percent of the population live in towns (1995 estimates), double the 1990 census figure of 16 percent. Approximately 54 percent of urban dwellers have sanitation facilities. Infant mortality is high at 140 per 1000 births, but down from 205 per 1000 births in 1980 (by way of comparison, in the United States, infant mortality is 7 per 1,000).

OVERVIEW OF ECONOMY

Benin is one of the 30 or so poorest countries in the world. Gross domestic product (GDP) per capita measured with the purchasing power parity conversion (which makes allowance for the low price of many basic commodities in Benin) was estimated to be US__BODY__,030 for the year 2000. The economy is heavily dependent on agriculture, which employs approximately 80 percent of the population. Crops are grown for export as well as domestic consumption. Industry is relatively underdeveloped and restricted mainly to simple import substitution products and basic agro-industrial processes.

Successive governments have struggled to tighten the country's economic and fiscal performance at the request of the International Monetary Fund (IMF) and the World Bank, while dealing with trade union pay demands. Benin entered agreements with the IMF in 1989 to introduce reforms. Though progress has been slow and is hindered by political infighting, there have been significant changes in the economy as a result of these reforms. In 1991-96 the government privatized or liquidated 100 state enterprises including cement, textiles, brewing, tobacco, and petroleum enterprises. The insurance sector has been liberalized, leading to increased competition. There has been significant foreign investment in telecommunications. Cotton production is also opening up to private investment. However, the IMF has continued to press for further privatization's of state-run enterprises, including the major utilities such as electricity and water, as well as postal services and telecommunications. Privatization has significantly decreased the proportion of government spending. Since the collapse of the government in 1989 and the restoration of multi-party democracy with the introduction of the new constitution in 1990, there has been increased investment from overseas, and a resumption of donor lending.

Monetary policy is controlled by membership of the Union Economique et Monetaire Ouest-Africaine (UEMOA,) and Benin is also a member of the African Franc Zone, which consists of those countries that use the CFA franc for their national currencies. Membership limits government borrowing and credit creation and sets interest rates as well. The UEMOA oversaw a 50 percent devaluation of the CFA franc in 1994, which increased the prices received by producers for exports. Local production recovered, and GDP growth rose to about 5 percent a year in the late 1990s. The other effect of the CFA franc devaluation was that it led to inflation rising to 38 percent in 1994 and 14 percent in 1995. Inflation then fell to 4.9 percent in 1996 and 3.5 percent in 1997. It rose once more in 1998 to 5.7 percent due to wage increases, cereal crop shortages, and the energy crisis caused by the drought in Ghana. Inflation fell again in 1999 to 3 percent.

Agriculture has been the main economic growth sector. Cotton production grew over 300 percent from 1990 to 1997. However, cotton production has been affected adversely by falling prices and management problems. Gasoline production stopped in 1998, but rehabilitation is under way due to the recent rise in world oil prices. In 1998 a drought in Ghana led to a serious setback in economic growth due to interruption of Benin's electricity supply, which caused much industry to close. Electricity supplies returned to normal in 1999.

The U.S. State Department states: "the most daunting obstacle to economic development … is the pervasive and increasing level of corruption throughout society. Corruption impacts virtually all aspects of social, economic, and political life in Benin. Inefficient and un-motivated government bureaucracies, even when not overtly corrupt, also make it extremely difficult for foreign businesses to conduct operations in Benin." The government agreed in 2001 to increase plans to end corruption, but the effect of these measures is not yet clear.

POLITICS, GOVERNMENT, AND TAXATION

Benin (once known as Dahomey) became a French colony in 1900 and was granted independence in 1960. Since that time it has experienced severe political turbulence. Hubert Maga, elected under a multi-party system and the country's first president, was ousted in a coup (a domestic military takeover of a government) in 1963, and regular changes of government then ensued until another coup in 1972 brought General Kerekou to the presidency. In 1974 Marxism-Leninism (the political and economic doctrines of Karl Marx and Vladimir Ilyich Lenin) became the country's official ideology. Major companies, banks, and offices were nationalized. Corruption followed and the economy contracted so sharply that the government was unable to pay wages, which led to strikes and eventually to a crisis in 1989. Kerekou convened a national conference of leading politicians, including opposition representation, later in 1989, which resulted in the creation of a multi-party democracy. A new constitution was adopted after a referendum in 1990. Legislative and presidential elections were held in 1991, and in a contest with Kerekou, Nicephore Soglo was elected president with 67 percent of the vote. Since the creation of the new constitution in 1990, Benin has, according to the U.S. State Department, been viewed as "a democratic model not only for its West African region but even for the entire continent."

Soglo became unpopular due to the persistence of economic problems—the inability of the government to pay salaries, high inflation, and shortages of basic commodities—and he succeeded in alienating his supporters such that he lost the 1996 election to Kerekou. In the meantime, Kerekou had renounced his military title, developed a new tolerance for the free market economy, and expressed his determination to combat corruption. Despite opposition from 16 other candidates, and a second round run-off (from which Soglo withdrew), Kerekou was successful at the polls in 2001 and secured another presidential term.

The 1990 constitution instituted a 5-year presidency, with the president eligible for re-election only once. The president has executive power and can suspend parliament with court approval. The members of the 83-seat assembly serve a 4-year terms. The position of prime minister (created in 1996) was dissolved in 1998 due to conflict between the president and the prime minister over executive powers.

Currently the main parties are fragmenting, leading to the formation of unstable coalitions, which has also decreased the effectiveness of the parliament. This dissension is likely to continue in the near future. Mr. Kerekou's coalition and the opposition are roughly equally represented in the assembly, meaning that the smaller parties can decide the parliamentary majority by aligning with one side or the other. Such tactical alliances have succeeded in blocking much government legislation. The trade unions are very powerful and are able to challenge the government's economic and fiscal policies through strikes, which also tend to lead to civil unrest and severe economic losses.

Benin raises less than 10 percent of the GDP in tax revenue and receives a further 2 percent in surpluses from state-owned enterprises, mainly monopolies. About 50 percent of government spending goes to social services (which includes health and education), about 14 percent on the armed forces, and the remainder is absorbed by general public sector administration. The military is an important influence in political life, and it has seized power though coups on several occasions. The relatively high level of spending on the military is an attempt to prevent alienation of the armed forces.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

There are 7,500 kilometers (4,660 miles) of roads and tracks in Benin, only 20 percent of which are paved. The coastal road that runs along the Lagos-Accra route is paved, and travel between Porto-Novo and Cotonou is easy. Contracts were awarded in 1998 for the construction of another motorway from Cotonou to Porto Novo. A north-south road forms a link to Burkina Faso and Niger. Development is focused primarily on rehabilitation and feeder roads to allow farmers to market their crops more effectively.

There are 635 kilometers (394 miles) of railway line, of which 579 kilometers (360 miles) are main lines. The most important route is from Cotonou to Parekou (440 kilometers, or 273 miles), which provides an important part of the link between Niger and Cotonou. The deep-water port at Cotonou handles 2 to 2.5 million metric tons per year and processes transit trade to Burkina Faso and Niger. A World Bank study showed that the port was losing a potential US$22 million per year in container operations due to poor organization by the state handling company. Management and development of Cotonou Port is due to be transferred to a private operator, while leaving equipment

and installations in state hands. Cotonou International Airport carries 250,000 passengers per year. There are 4 secondary airports. The private Benin Inter-Regional Airline was started in 1991 and provides local and regional flights.

In 1996 there were 30,000 telephone lines in Benin, but expansion has been underway. A 1,500 kilometer microwave network currently connects 52 exchanges, and an Intelsat station is being installed. In 1999 Alcatel (a French company) and U.S.-based Titan won a US$60 million contract for fixed and mobile phone expansion projects respectively. There are approximately 150,000 radio sets being used in Benin. Television broadcasts began in 1972, but the state monopoly over television ended in 1997. In 1998, 35 radio licenses (including 13 commercial station licenses) and 3 TV station licenses were issued. There are 13 daily newspapers.

Most of the country's energy for domestic use comes from wood fuel. Electricity is produced and imported by Communaute Electrique du Benin (CEB), Benin's state-owned electricity company. CEB relies heavily on Ghana's Akosombo dam for most of its electricity. However, this reliance produced a crisis during the 1998 Ghanaian drought, when Benin's electricity supply was severely affected. This difficulty has led to attempts to diversify electricity production facilities and moves to import generators. Togo and Benin also have a shared 65 megawatt (mw) station on the Mono River, although both are still dependent on Ghana. A second 104 mw dam is under construction on the Mono River.

ECONOMIC SECTORS

Agriculture (including hunting, forestry, and fishing) employed roughly 80 percent of the workforce and generated 37.9 percent of the GDP in 1999. Cotton and palm oil are the main exports, and the country is predominantly self-sufficient in foodstuffs. Industry (including mining, manufacturing, construction, and power) provided 13.5 percent of the GDP in 1999, while services contributed 48.6 percent.

AGRICULTURE

Problems in the agriculture sector arise from poor transport, inadequate storage, and the inability of farmers to provide legal evidence of land ownership as collateral for loans. Despite these difficulties, agriculture has expanded and developed since the 1994 CFA franc de-valuation. In 1997 a project was started to rejuvenate the collective farms, costing US$5 million and employing 2000 people over 5 years. The project will be run by the private sector, with foreign management of some farms.

The oil palm is the most important tree crop in the south, and the oil it produces has a wide variety of uses in foodstuffs (especially margarine) and in industry (especially in soaps). Output in the 1970s and 1980s, however, fell due to drought, the overvalued franc, and low world prices. In 2000 a pilot project aimed to raise yields of coffee, cocoa, ground nuts (such as peanuts), and kerite (shea nuts), all grown in the south.

Cotton, the main export, is normally grown in the north. Higher producer prices after the 1994 devaluation boosted output to 15,000 metric tons of lint (unprocessed cotton fiber) in the 1997-98 season, though it fell again in the 1998-99 season due to smaller yields and a financial scandal in Sonapra (the cotton parastatal). The cotton price slump in 1999 means Sonapra might not be able to find growers at current prices and might face being sold to the private sector.

Food and livestock production accounts for 48 percent of the total agricultural output. Smallholders produce for domestic and regional markets. Maize and cassava are grown in the south and sorghum, millet, and yams in the drier north. Rice production is expanding rapidly and reached 30,900 metric tons in the 1998-99 season with help from a UN-backed program. Production was encouraged by Centre d'Action Regionale pour le Development Rural (Center of Regional Action for Rural Development), a government body set up to develop the rural economy.

In 1998 there were 1.3 million cattle, 6 million sheep, 1.1 million goats, and 5 million pigs in Benin. Cattle are kept mainly in the north, but there have been attempts to move production to the south. Livestock output meets 60 percent of the national requirements. Production is currently more competitive due to the 1994 devaluation of the CFA franc. There is a long-term plan for the country to be self-sufficient in dairy products (as of 2001 Benin imports 8,000 metric tons of dairy products each year).

The Office Nationale du Bois was established 1983 to develop timber production and to stop deforestation. Plantations, mainly teak, covered 38,000 hectares in 1989 and further planting is planned. The fish catch is mainly from inland waters, rivers, and lagoons. Fish production is currently 12,000 metric tons per year, which meets 50 percent of domestic consumption.

INDUSTRY

In Benin there is no significant mining except for limestone, which is used in cement production. Improvements in mining regulations have stimulated foreign interest in recent years. Gold mining has attracted investment from 8 foreign companies and there are also proven reserves of iron and phosphates.

In 1999 the government signed a contract with Zetal Oil to rehabilitate the Sémé oil field at a cost of US$45 million. Sémé began production in 1982 and reached its peak production in 1985 at 10,000 barrels per day. Production ended in 1998 when low world prices and dwindling reserves meant that the field was not economical. Foreign companies (especially from the United States and Canada) are exploring Benin for further viable fields.

In 1999 a US$17.9 million oil terminal opened in Cotonou Port. The oil distribution company, Sonacop (previously state-owned), was sold to the private sector in 1999. Plans for a 1,000-kilometer gas pipeline from Nigeria to Benin, Togo, and Ghana moved forward in 1999 when 2 international companies and 4 regional gas boards signed a deal on the US$400 million project.

Manufacturing focuses on the processing of agricultural products and the production of consumer goods. The latter sector depends on imported inputs and was hit hard by the 1994 currency devaluation. However, this impact also meant the local raw material companies found it easier to compete with imports.

Cotton led agro-industry in the 1990s. Ginning capacity expanded rapidly, and the country currently can process 462,500 metric tons per year in 10 government-owned plants and 6 private plants. Capacity could be increased to 673,000 metric tons per year if the planned expansion is carried out. Restructuring plans for the government-owned plants are currently underway.

Palm oil has been in decline since the 1980s. Sonicog runs 6 small palm oil mills, though only 3 have operated in recent years. The sector is being restructured with World Bank assistance for privatization. Food, drink, and tobacco processing, as well as footwear manufacture and ceramics, form the basis of the import substitution sector.

SERVICES

After the collapse of several banks in 1998 and 1999, the financial sector was completely overhauled, with the liquidation of failed banks and the setting up of new private sector institutions with assistance from France and the World Bank. Benin's banks include the Banque Internationale du Benin, Ecobank, Bank of Africa-Benin, and Financial Bank.

A regional stock exchange, the Bourse Regionale des Valeurs Mobilieres (BRVM), was opened in 1998. It will help improve the capital market by attracting local savings and slowing capital outflow to Europe. The headquarters of the stock exchange is in Abidjan, but all UEMOA members have trading floors in their countries.

Tourism is in its infancy, and arrivals are usually French citizens or backpackers exploring West Africa. Attractions are many: the former slave towns of Porto Novo and Grand Popo, stilt villages and the lagoons around Ganvie, the northern nature reserves including the Pendjari area, and the Parc West (on the border of Burkina Faso and Niger). Hotel facilities vary in quality and availability, and outside Cotonou they provide only the basics.

INTERNATIONAL TRADE

There is a chronic international trade deficit, with exports in 1999 valued at US$396 million, and imports at US$566 million. However, the large number of un-recorded transactions means that assessment is difficult, mainly due to illegal cross-border trade with Nigeria.

Cotton is the most important export, followed by oil. Re-exports (goods that are imported into Benin and then sent to neighboring countries such as Burkina Faso and Niger) account for one-third to one-half of total exports, while food and capital goods account for one-quarter and one-fifth of imports respectively.

In 1999, France (38 percent), China (16 percent), the United Kingdom (9 percent), and Côte d'Ivoire (5 percent) were the main sources of imports for Benin. Currently, Asia supplies rice and manufactured goods for regional re-exports. Brazil (14 percent), Libya (5 percent), Indonesia (4 percent), and Italy (4 percent) are the main destination for exports, mainly cotton, in 1999.

MONEY

Benin is part of the 8-member UEMOA, and the currency is the CFA franc. The Banque Centrale des Etats de l'Afrique de l'Ouest (BCEAO) issues currency notes and regulates credit expansion. The CFA franc was pegged at a fixed exchange rate to the French franc at 50:1 from 1948 but was overvalued in the late 1980s and subsequently devalued to CFA Fr 100 to 1 French franc in 1994. Since France joined European Monetary Union, the CFA franc is tied to the euro at CFA Fr655.959:Euro 1.

Benin is burdened with a huge foreign debt of more than US__BODY__.6 billion, although the country's major creditors are working with the Paris Club (an informal organization made of various creditor companies and countries), the IMF, and the World Bank to help it manage its obligations.

POVERTY AND WEALTH

One-third of the population live below the poverty line set by Benin, which suggests that close to 50 percent live below the dollar-a-day international poverty line. The dollar-a-day poverty line is based on the income required to provide the absolute minimum of nutrition, clothing, and shelter. Some 29 percent of children under 5 are malnourished (the figure is 1 percent for the United States), and life expectancy is 55 years (in the United States it is 77 years). Almost all those in poverty are in rural areas, relying on small-scale agriculture for their livelihoods and suffering because of poor land, inadequate rainfall, and not enough income to purchase good seeds, fertilizer, or farm machinery. In 1998 Benin was ranked 157th out of 174 countries in the UN's Human Development Index, which combines measures of income, education, and health provision.

In 1995 there was 1 doctor per 200,000 inhabitants. There was 1 midwife per 12,000 pregnant women, and just 42 percent of the population had access to health care. Several international initiatives to improve these figures have been undertaken. The constitution decrees that primary education is compulsory for all, though fees must be paid. In 1996 there was a 62 percent enrollment in primary age education, though this number dropped to 17 percent in secondary education. In 1993 almost US__BODY__ million was set aside for a scheme for rural girls to be exempted from school fees. In 1992 adult literacy stood at 27 percent.

WORKING CONDITIONS

Most people are very poor and earn their living through agriculture on small family farms. Most of the work is undertaken by hand, and women do most of the labor, helped by children. There are no official unemployment figures for Benin, but unemployment figures have little significance in a low-income African economy. There are very few with no work at all. There is no unemployment benefit, and those who do not work rely on support from charities or their families. Many people would like a modern sector job, but eke out an existence on family farms or in casual informal sector activities (such as hawking, portering, scavenging) in the urban areas. There was a minimum professional salary of US$38 per month in 1997. The biannual civil servant salary increase stopped in 1998, but trade unions are demanding its reintroduction. The United Nations Development Program estimates that 55 percent of urban dwellers earned less than US$160 per year in 1992.

The constitution of the Republic of Benin guarantees the basic rights and freedoms of citizens. Forced labor is illegal, but human rights are not enforced in a consistent manner. Children often work to supplement household income, resulting in lower school attendance figures. In 1998 it was estimated that 29 percent of children aged 10-14 had to work to supplement family income.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1900. Dahomey (the former name of Benin) becomes a French colony.

1960. Independence is granted, and Hubert Maga becomes the country's first president.

1963. A coup brings Colonel Christophe Soglo to power.

1963. Dahomey returns to civilian rule, with Sourou-Migan Apithey elected president.

1965. Soglo assumes power again.

1967. Major Maurice Kouandete seizes power through a coup.

1968. Emile-Derlin Zinzou is appointed president by the military, but Kouandete again assumes power.

1969. A presidential election is attempted but collapses. Maga is nominated president again.

1972. Maga is succeeded by Ahomadegbe, but Major Mathieu Kerekou seizes power.

1975. Dahomey changes its name to Benin.

1990. A new constitution is adopted, paving the way for political stability.

1991. Nicephore Soglo defeats Kerekou at the polls to become president. Soglo begins the privatization or liquidation of 100 state-run companies.

1994. The CFA franc is devalued by 50 percent, boosting exports and increasing inflation.

1996. Kerekou defeats Soglo in an election to become president again.

2001. Kerkou wins re-election to the presidency.

FUTURE TRENDS

After success in the 2001 presidential election, President Mathieu Kerekou was expected to continue with his popular poverty reduction and growth program, which is set to last to 2003. Driven by plans for increased public investment and commitments of donor support, real GDP growth is expected to remain at around the 5 percent a year level, allowing for steady improvements in average living standards. Cereal production still faces problems, despite recent improvements, as a result of weak infrastructure and delays in payments to farmers. Future growth rates are expected to be below the rate of population increase, leading to increased reliance on food imports. Sound monetary policy, implemented by the regional central bank, is projected to keep inflation at around 3 percent. The gap between international payments and receipts will be helped by increased foreign aid, expansion in cotton exports, and debt relief from the Heavily Indebted Poor Country (HIPC) scheme, a program instituted by the IMF and World Bank to help the poorest countries manage their foreign debt.

In politics, the multiparty system introduced in 1990 appears to be secure, with all parties prepared to accept the verdict of the ballot box. President Kerekou appears unlikely to make any major change in the style and composition of his executive team. The new anti-corruption measures, which require leaders to declare their assets, is now being implemented, and there are high expectations that they will increase honesty in public life. An interesting development is the introduction of a new electoral code in which expatriate residents are able to vote, and this move is seen as an attempt to make politics less inward-looking.

DEPENDENCIES

Benin has no territories or colonies.

BIBLIOGRAPHY

Allen, Chris, and Michael Radu. Benin, the Congo, Burkina Faso: Economics, Politics, and Society. New York and London: Printer, 1988.

"Benin Economy." Newafrica.com. <http://www.newafrica.com/profiles/economy.asp?countryid=6>. Accessed October 2001.

Economist Intelligence Unit. Country Profile: Benin. London: Economist Intelligence Unit, 2001.

Hodd, Michael. "Niger." The Economies of Africa. Dartmouth:Aldershot, 1991.

Kelly, R. C. et al., editors. Benin Country Review 1998/1999. Houston: Commercial Data International, Inc., 1999.

U.S. Central Intelligence Agency. World Factbook 2001. <http://www.odci.gov/cia/publications/factbook/index.html>. Accessed September 2001.

U.S. Department of State. FY 2001 Country Commercial Guide: Benin. <http://www.state.gov/www/about_state/business/com_ guides2001/africa/index.html>. Accessed October 2001.

—Jack Hodd

CAPITAL:

Porto-Novo.

MONETARY UNIT:

Communauté Financiére Africaine franc (CFA Fr). One franc equals 100 centimes. There are coins of 1, 2, 5, 10, 25, 50, 100, and 500 CFA Fr. There are notes of 50, 100, 500, 1,000, 5,000, and 10,000 CFA Fr.

CHIEF EXPORTS:

Cotton, crude oil, palm products, cocoa.

CHIEF IMPORTS:

Foodstuffs, tobacco, petroleum products, capital goods.

GROSS DOMESTIC PRODUCT:

US$6.6 billion (purchasing power parity, 2000 est.).

BALANCE OF TRADE:

Exports: US$396 million (f.o.b., 1999 est.). Imports: US$566 million (c.i.f., 1999 est.).