Economy of Benin
Encyclopedia
The economy of Benin
remains underdeveloped and dependent on subsistence agriculture
and cotton
. Cotton accounts for 40% of GDP and roughly 80% of official export receipts. There is also production of textile
s, palm products, and cocoa beans. Maize
(corn), bean
s, rice
, peanut
s, cashew
s, pineapple
s, cassava
, yams
, and other various tubers are grown for local subsistence. Benin began producing a modest quantity of offshore oil in October 1982. Production ceased in recent years but exploration of new sites is ongoing. A modest fishing fleet provides fish and shrimp for local subsistence and export to Europe. Formerly government-owned commercial activities are now privatized. A French brewer
acquired the former state-run brewery. Smaller businesses are privately owned by Beninese citizens, but some firms are foreign owned, primarily French and Lebanese
. The private commercial and agricultural sectors remain the principal contributors to growth.
government in 1990, Benin has undergone an economic recovery. A large injection of external investment from both private and public sources has alleviated the economic difficulties of the early 1990s caused by global recession and persistently low commodity prices (although the latter continues to affect the economy). The manufacturing sector is confined to some light industry, which is mainly involved in processing primary products and the cow production of consumer goods. A planned joint hydroelectric project with neighboring Togo
is intended to reduce Benin's dependence on imported energy mostly from Ghana
, which currently accounts for a significant proportion of the country's imports. The service sector has grown quickly, stimulated by economic liberalization and fiscal reform, and the use of modern technology such as automobiles and computers has grown considerably as a result. Membership of the CFA Franc Zone offers reasonable currency stability as well as access to French economic support. Benin sells its products mainly to France and, in smaller quantities, to the Netherlands, Korea, Japan, and India. France is Benin's leading source for imports. Benin is also a member of the West Africa
n economic community ECOWAS.
Despite its rapid growth, the economy of Benin still remains underdeveloped and dependent on subsistence agriculture, cotton production, and regional trade. Growth in real output averaged a sound 5% since 1996, but a rapid population rise offset much of this growth on a per capita basis. Inflation has subsided over the past several years. Commercial and transport activities, which make up a large part of GDP, are vulnerable to developments in Nigeria
, particularly fuel shortages.
Although trade unions in Benin
represent up to 75% of the formal workforce, the large informal economy has been noted by the International Trade Union Confederation
(ITCU) to contain ongoing problems, including a lack of women's wage equality, the use of child labour
, and the continuing issue of forced labour
.
A legal framework regarding licensing, bank activities, organizational and capital requirements, inspections and sanctions (all applicable to all countries of the Union) is in place and underwent significant reforms in 1999. There is no customer deposit insurance system.
Benin has a lively and diversified microfinance sector. Data from 2003 by the Central Bank stated a penetration rate of microfinance services of almost 60 percent. In 2006 the Ministry of Microfinance and Employment of Youth and Women counted 762 organizations with 1308 branches, including Cooperatives, NGOs, Savings/Credit Associations and government projects. Programmes for strengthening the sector are carried out on national and regional levels, such as the PRAFIDE (Programme Régional d’Appui à la finance Décentralisée). The microfinance sector is also subject to supervision through the Central Bank as well as the responsible Ministry for Microfinance and Employment of Youth and Women.
Benin is member of the regional Bourse Regional des Valeur Mobiliés (BRVM) located in Abidjan, Côte d'Ivoire. Stocks were issued by a number of companies in the region. Listed bonds were partly issued by companies and partly by governments of the West African Monetary and Economic Union (UEMOA).
The payment and settlement system and clearing mechanisms were reformed in 2004 through the BCEAO and offer RTGS and SWIFT access to banks, financial institutions, the stock exchange as well as the Central bank and special banks.
Benin
Benin , officially the Republic of Benin, is a country in West Africa. It borders Togo to the west, Nigeria to the east and Burkina Faso and Niger to the north. Its small southern coastline on the Bight of Benin is where a majority of the population is located...
remains underdeveloped and dependent on subsistence agriculture
Subsistence agriculture
Subsistence agriculture is self-sufficiency farming in which the farmers focus on growing enough food to feed their families. The typical subsistence farm has a range of crops and animals needed by the family to eat and clothe themselves during the year. Planting decisions are made with an eye...
and cotton
Cotton
Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....
. Cotton accounts for 40% of GDP and roughly 80% of official export receipts. There is also production of textile
Textile
A textile or cloth is a flexible woven material consisting of a network of natural or artificial fibres often referred to as thread or yarn. Yarn is produced by spinning raw fibres of wool, flax, cotton, or other material to produce long strands...
s, palm products, and cocoa beans. Maize
Maize
Maize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
(corn), bean
Bean
Bean is a common name for large plant seeds of several genera of the family Fabaceae used for human food or animal feed....
s, rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
, peanut
Peanut
The peanut, or groundnut , is a species in the legume or "bean" family , so it is not a nut. The peanut was probably first cultivated in the valleys of Peru. It is an annual herbaceous plant growing tall...
s, cashew
Cashew
The cashew is a tree in the family Anacardiaceae. Its English name derives from the Portuguese name for the fruit of the cashew tree, caju, which in turn derives from the indigenous Tupi name, acajú. It is now widely grown in tropical climates for its cashew nuts and cashew apples.-Etymology:The...
s, pineapple
Pineapple
Pineapple is the common name for a tropical plant and its edible fruit, which is actually a multiple fruit consisting of coalesced berries. It was given the name pineapple due to its resemblance to a pine cone. The pineapple is by far the most economically important plant in the Bromeliaceae...
s, cassava
Cassava
Cassava , also called yuca or manioc, a woody shrub of the Euphorbiaceae native to South America, is extensively cultivated as an annual crop in tropical and subtropical regions for its edible starchy tuberous root, a major source of carbohydrates...
, yams
Yam (vegetable)
Yam is the common name for some species in the genus Dioscorea . These are perennial herbaceous vines cultivated for the consumption of their starchy tubers in Africa, Asia, Latin America and Oceania...
, and other various tubers are grown for local subsistence. Benin began producing a modest quantity of offshore oil in October 1982. Production ceased in recent years but exploration of new sites is ongoing. A modest fishing fleet provides fish and shrimp for local subsistence and export to Europe. Formerly government-owned commercial activities are now privatized. A French brewer
Brewing
Brewing is the production of beer through steeping a starch source in water and then fermenting with yeast. Brewing has taken place since around the 6th millennium BCE, and archeological evidence suggests that this technique was used in ancient Egypt...
acquired the former state-run brewery. Smaller businesses are privately owned by Beninese citizens, but some firms are foreign owned, primarily French and Lebanese
Lebanon
Lebanon , officially the Republic of LebanonRepublic of Lebanon is the most common term used by Lebanese government agencies. The term Lebanese Republic, a literal translation of the official Arabic and French names that is not used in today's world. Arabic is the most common language spoken among...
. The private commercial and agricultural sectors remain the principal contributors to growth.
Economic development
Since the transition to a democraticDemocracy
Democracy is generally defined as a form of government in which all adult citizens have an equal say in the decisions that affect their lives. Ideally, this includes equal participation in the proposal, development and passage of legislation into law...
government in 1990, Benin has undergone an economic recovery. A large injection of external investment from both private and public sources has alleviated the economic difficulties of the early 1990s caused by global recession and persistently low commodity prices (although the latter continues to affect the economy). The manufacturing sector is confined to some light industry, which is mainly involved in processing primary products and the cow production of consumer goods. A planned joint hydroelectric project with neighboring Togo
Togo
Togo, officially the Togolese Republic , is a country in West Africa bordered by Ghana to the west, Benin to the east and Burkina Faso to the north. It extends south to the Gulf of Guinea, on which the capital Lomé is located. Togo covers an area of approximately with a population of approximately...
is intended to reduce Benin's dependence on imported energy mostly from Ghana
Ghana
Ghana , officially the Republic of Ghana, is a country located in West Africa. It is bordered by Côte d'Ivoire to the west, Burkina Faso to the north, Togo to the east, and the Gulf of Guinea to the south...
, which currently accounts for a significant proportion of the country's imports. The service sector has grown quickly, stimulated by economic liberalization and fiscal reform, and the use of modern technology such as automobiles and computers has grown considerably as a result. Membership of the CFA Franc Zone offers reasonable currency stability as well as access to French economic support. Benin sells its products mainly to France and, in smaller quantities, to the Netherlands, Korea, Japan, and India. France is Benin's leading source for imports. Benin is also a member of the West Africa
West Africa
West Africa or Western Africa is the westernmost region of the African continent. Geopolitically, the UN definition of Western Africa includes the following 16 countries and an area of approximately 5 million square km:-Flags of West Africa:...
n economic community ECOWAS.
Despite its rapid growth, the economy of Benin still remains underdeveloped and dependent on subsistence agriculture, cotton production, and regional trade. Growth in real output averaged a sound 5% since 1996, but a rapid population rise offset much of this growth on a per capita basis. Inflation has subsided over the past several years. Commercial and transport activities, which make up a large part of GDP, are vulnerable to developments in Nigeria
Nigeria
Nigeria , officially the Federal Republic of Nigeria, is a federal constitutional republic comprising 36 states and its Federal Capital Territory, Abuja. The country is located in West Africa and shares land borders with the Republic of Benin in the west, Chad and Cameroon in the east, and Niger in...
, particularly fuel shortages.
Although trade unions in Benin
Trade unions in Benin
Trade unions in Benin operate in relative freedom, with approximately 75% of the formal sector being unionized. There are, however, concerns expressed by the International Labour Organization and the International Trade Union Confederation about the discrepancies between the government's Labour...
represent up to 75% of the formal workforce, the large informal economy has been noted by the International Trade Union Confederation
International Trade Union Confederation
The International Trade Union Confederation is the world's largest trade union federation. It was formed on November 1, 2006 out of the merger of the International Confederation of Free Trade Unions and the World Confederation of Labour...
(ITCU) to contain ongoing problems, including a lack of women's wage equality, the use of child labour
Child labor
Child labour refers to the employment of children at regular and sustained labour. This practice is considered exploitative by many international organizations and is illegal in many countries...
, and the continuing issue of forced labour
Unfree labour
Unfree labour includes all forms of slavery as well as all other related institutions .-Payment for unfree labour:If payment occurs, it may be in one or more of the following forms:...
.
Banks and Finance
Benin’s financial sector is dominated by banks, and in general remains shallow. However, a series of reforms were undertaken in the 1990s, which resulted in the consolidation of the banking sector and in the privatization of all state banks.A legal framework regarding licensing, bank activities, organizational and capital requirements, inspections and sanctions (all applicable to all countries of the Union) is in place and underwent significant reforms in 1999. There is no customer deposit insurance system.
Benin has a lively and diversified microfinance sector. Data from 2003 by the Central Bank stated a penetration rate of microfinance services of almost 60 percent. In 2006 the Ministry of Microfinance and Employment of Youth and Women counted 762 organizations with 1308 branches, including Cooperatives, NGOs, Savings/Credit Associations and government projects. Programmes for strengthening the sector are carried out on national and regional levels, such as the PRAFIDE (Programme Régional d’Appui à la finance Décentralisée). The microfinance sector is also subject to supervision through the Central Bank as well as the responsible Ministry for Microfinance and Employment of Youth and Women.
Benin is member of the regional Bourse Regional des Valeur Mobiliés (BRVM) located in Abidjan, Côte d'Ivoire. Stocks were issued by a number of companies in the region. Listed bonds were partly issued by companies and partly by governments of the West African Monetary and Economic Union (UEMOA).
The payment and settlement system and clearing mechanisms were reformed in 2004 through the BCEAO and offer RTGS and SWIFT access to banks, financial institutions, the stock exchange as well as the Central bank and special banks.
- Banque Internationale du BéninBanque Internationale du BéninBanque Internationale du Bénin is a national bank of Benin. It is a member of the West African Bankers' Association.It has its headquarters based at Carrefour des 3 Banques in Cotonou but also has branches in Porto-Novo and Parakou. Nigeria dominates the bank, with the First Bank of Nigeria Plc....
(I.BE) - Bank of AfricaBank of AfricaBank of Africa is a multinational bank in Africa. Its first office was founded in Bamako, Mali in 1982.-Branches and subsidiaries:Bank of Africa:*BOA Group*Banque de l'Habitat du Benin in Cotonou, Benin*BOA Burkina Faso*BOA Côte d'Ivoire...
Benin - Continental BankContinental BankContinental Bank was a bank in China. It specialized in savings, warehouses, trusts and real estate business. It was founded in Tianjin in 1919 by Mr. Feng Guozhang, the acting president of Republic of China and Mr. Tan Lisun, the former Nanjing director of Bank of China. Half-month later, a...
Benin - Diamond Bank Benin (DBB)
- EcobankEcobankEcobank, whose official name is Ecobank Transnational Inc., is a pan-African banking group with a presence in more African countries than any other bank...
- Financial BankFinancial BankFinancial Bank is a bank of Benin. It is a member of the West African Bankers' Association.It has its headquarters based in Cotonou but also has branches in cities such as Parakou. The bank is dominated by Swiss ownership, with Financial BC in Geneva having an 85% share, Aiglon S.A...
- Finadev
- Caisse Nationale d'Epargne
- Credit du Bénin
- Equibail
External links
- West African Agricultural Market Observer/Observatoire du Marché Agricole (RESIMAO), a project of the West-African Market Information Network (WAMIS-NET), provides live market and commodity prices from fifty seven regional and local public agricultural markets across Benin, Burkina Faso, Côte d'Ivoire, Guinea, Niger, Mali, Senegal, Togo, and Nigeria. Sixty commodities are tracked weekly. The project is run by the Benin Ministry of Agriculture, and a number of European, African, and United Nations agencies.
- Benin latest trade data on ITC Trade Map