Benin Economic Outlook
- The economy slowed down to an estimated 4.0% from 5.2% in 2015 mainly due to electoral activity and lower growth in neighbouring Nigeria.
- Growth is projected to pick up in 2017 to 5.5% and 6.2% in 2018 with the start of the government’s 2016-21 action programme, which aims to double investment over the period.
- Supporting entrepreneurship for processing agricultural products and transitioning towards the formal sector can particularly help to industrialise the economy and ensure sustainable and more inclusive growth.
Economic growth was estimated at 4.0% in 2016, a further decline from 5.2% in 2015 and 6.5% in 2014, caused by electoral activity, power shortages and an economic slowdown in neighbouring Nigeria. Inflation remained low because of lower world oil prices and depreciation of the naira, the Nigerian currency. The budget deficit, which had increased between 2013 and 2015, fell to 6.2% of gross domestic product (GDP) in 2016 thanks to cuts in operating costs by the new government that came to power in April that year.
The government’s 2016-21 action programme, Programme d’action du gouvernement (PAG), known as “Bénin révélé” (Benin revealed) is expected to boost the economy by 5.5% in 2017 and 6.2% in 2018, with investment rising from 18.8% of GDP in 2016 to an annual average of 34.0% through to 2021. The public deficit, projected as 9.4% of GDP in 2017, should ease in the next few years. The government needs to keep debt sustainable and improve the country’s absorption capacity to ensure a proper implementation of its investment plan. The outlook for 2017 and 2018 is also part of the country’s sustainable development goals as set out in its Agenda 2030 development plan. The PAG aims to consolidate social progress and significantly reduce poverty, which has been on the rise.
Boosting sustainable and inclusive growth requires a particular focus on industry and entrepreneurship. The country’s industrial structure is small and not very diverse, so the government should strengthen it through greater use of the nation’s agricultural potential and Benin’s position as a transit country and neighbour of Nigeria.
Entrepreneurship needs more support, especially in agro-processing. The PAG’s development model, including more public-private partnerships (PPPs) as well as promoting self-employment and entrepreneurship, is part of this dynamic.