Benin - Country Commercial Guide
Investment Climate Statement

The Investment Climate Statement Chapter of the CCG is provided by the State Department. Any questions on the ICS can be directed to EB-ICS-DL@state.gov.

Last published date: 2021-09-29

The U.S. Department of State Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world.  They analyze a variety of economies that are or could be markets for U.S. businesses.

Topics include Openness to Investment, Legal and Regulatory systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

These statements highlight persistent barriers to further U.S. investment.  Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy. To access the ICS, visit the U.S. Department of State Investment Climate Statement website. 

EXECUTIVE SUMMARY

Benin has been a stable democracy since 1990, enjoying until recently a reputation for regular, peaceful, and inclusive elections. In 2019, the government held legislative elections for which no opposition party qualified to participate and which were neither fully competitive nor inclusive. Elections-related unrest in 2019 left several people dead. 

Benin’s overall macroeconomic conditions were positive in 2019. According to IMF estimates, GDP growth increased from 6.7 percent in 2018 to 6.9 percent in 2019. The COVID-19 pandemic and Nigeria’s partial closure of its borders beginning in August 2019 are expected to slow GDP growth to 3.2 percent in 2020. Port activity and the cotton sector are the largest drivers of economic growth. Telecommunications, agriculture, energy, cement production, and construction are other significant components of the economy. Benin also has a large informal sector. The country’s GDP is roughly 51.1 percent services, 26.1 percent agriculture, and 22.8 percent manufacturing. 

President Patrice Talon launched an ambitious $15 billion five-year Government Action Plan (PAG) in 2016. The PAG lays out a development plan structured around 45 major projects, 95 sector-based projects, and 19 institutional reforms.  With the goals of strengthening the administration of justice, fostering a structural transformation of the economy, and improving living conditions, the projects are concentrated in infrastructure, agriculture and agribusiness, tourism, health, and education.  The government estimates that full implementation of the PAG will result in the creation of 500,000 new jobs and a leap in national economic and social conditions. The government intended that 61 percent of the PAG be funded through public-private partnerships (PPPs), but through the end of 2019 no such partnerships had been secured. Government critics allege that the Talon administration is using the PAG in part to channel resources and contracts to administration insiders. 

Benin continues efforts to attract private investment in support of economic growth. The Investment and Exports Promotion Agency (APIEX) is a one-stop-shop for promoting new investments, business startups, and foreign trade. In 2019, APIEX worked with foreign companies to facilitate new investments, though some companies reported that the agency was under-resourced and hamstrung by bureaucratic red tape in other agencies and ministries. 

In June 2017, a five-year, $375 million Millennium Challenge Corporation (MCC) Compact with Benin entered into force. The Benin Power Compact is advancing policy reforms to bolster financing for the electricity sector, attract private capital into power generation, and strengthen regulation and utility management. Through the compact MCC is expanding the capacity and increasing the reliability of Benin’s power grid in southern and northern Benin. As two thirds of Benin’s population does not have access to electricity, the compact also includes a significant off-grid electrification project via a clean energy grant facility that supports private sector investment in off-grid power systems. This follows Benin’s 2006-2011 compact, which modernized the country’s port – the principal source of government revenue – and improved land administration, the justice sector, and access to credit.