Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Benin has been a stable democracy since 1990 and has a small domestic market. The country’s economy is heavily dependent on trade ties to its neighbors, particularly Nigeria. Its overall macroeconomic conditions declined in 2020, with a slow growth rate of around 2 percent resulting from the COVID-19 pandemic. Main economic drivers include Benin’s cotton industry and other cash crops, the Port of Cotonou, and telecommunications. Cashew and pineapple production and processing have substantial commercial potential. A nascent tourism sector has potential in the longer term. Historical cultural ties to the United States may generate tourism in the south and central parts of Benin; game parks in the north seemed to be a potential growing sector but prospects are now limited by increasing security concerns. A lack of tourist infrastructure restricts development of both markets. The country’s primary source of revenue is the Port of Cotonou, although the government is seeking to expand its revenue base. A large informal sector, estimated at over 70 percent of GDP, is based primarily on unregulated trade with Nigeria.
In 2019, Benin imported about $5 billion in goods such as rice, meat and poultry, alcoholic beverages, fuel plastic materials, palm oil, electricity, and passenger vehicles, a. Benin’s total exports were $1.62 billion in 202019. Principal exports are ginned cotton, cotton cake and cotton seeds, cashew, shea butter, cooking oil, and raw copper. Benin’s chief import partners include s, Brazil, China, , Spain, France, India, , , , Thailand, and the United States . The informal import of goods from Nigeria and Togo remains constant. In 2019 Benin’s chief export partners were Bangladesh, China, the United Arab Emirates, India, and Nigeria.
Currently trade volumes between Benin and the United States are small. The 2020 trade balance yielded a U.S. surplus but, dropped from $257.8 in 2019 to $191.4 million in 2020.
Imports entering Benin through the Port of Cotonou reach over 100 million consumers in neighboring landlocked countries including Burkina Faso, Mali, Niger, and Chad, as well as 155 million in Nigeria.
Benin’s immediate energy needs are significant, and the government has announced an ambitious plan to meet latent demand during the next decade. Private sector engagement in independent power production aims to increase electrical power production and reduce Benin’s dependence on Nigeria and Ghana. A second Millennium Challenge Corporation (MCC) compact entered into force in 2017, with $375 million devoted entirely to power sector improvements. This MCC 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. Infrastructure funded by the Compact includes 46 megawatts of power generation capacity, modernization of the Cotonou and regional distribution grid, and expansion of minigrids. As two thirds of Benin’s population does not have access to electricity, the Compact also includes a significant off-grid electrification project via its clean energy grant facility.