Situation and Cooperation

The transition from socialist one-party rule to democracy was a peaceful one. Four presidential and four parliamentary elections have been held in Benin since 1991. The process of decentralisation in the country is moving forward: local government elections held for the second time in April 2008 demonstrated that Benin's democracy has continued to grow more robust.

Through the port of Cotonou, Benin has become a transit country for goods heading to Nigeria, Burkina Faso, Niger and Chad. This port town is in fact home to the largest market for second-hand cars in all of West Africa. The informal sector plays a key role in the economy, especially in connection with trade with Nigeria. It is estimated that this sector accounts for up to 90 per cent of all trading activities.

Benin's industrial sector is not particularly well developed and focuses mainly on cement production, cotton ginning, textile and food processing. More than two thirds of the population work in agriculture. Benin's population is growing rapidly, and for this reason, an increasing number of people have to earn their living off the land or in the informal services sector in the country's few large cities. Those working in the informal sector have few opportunities for switching to the formal sector.

Benin is making efforts to attract foreign investors to the country, pointing to its stable political situation and its membership in regional economic organisations. Benin is a member of the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (UEMOA). The CFA franc, West Africa's common currency, is tied to the euro. This has helped to bring about monetary stability in the region.

Transparency International's assessment of corruption in the country has shown a marked improvement over the last few years. In the league of sub-Saharan African countries, Benin is now placed in the upper middle range.

Combating poverty

Despite huge efforts on the part of donors in the last few years, it has not been possible to reduce poverty in Benin to any great extent.
Around a third of the population lives in extreme poverty. The hardest hit are women and young people without school-leaving qualifications, but also small farmers and fishermen who are unable to produce enough or who have no access to credit.
According to the 2007/2008 Human Development Index (HDI), Benin ranks 163rd out of 177 countries.

Since 1999 the government of the country has initiated a series of national programmes aimed at implementing its poverty reduction policy. In April 2007 Benin adopted its second poverty reduction strategy paper (Stratégie de Croissance pour la Réduction de la Pauvreté, SCRP). This reinforces the government's determination to combat hunger, poverty and AIDS and to tackle illiteracy, environmental pollution and discrimination against women. What is special about SCRP is its guiding motif: overcoming poverty through economic growth.

However, to impact substantially on poverty in spite of the high population growth rate would necessitate an economic growth rate of at least 7 per cent. In recent years, though, the growth rate has fluctuated between three and six per cent; in 2007 it stood at 4.6 per cent.

The transition to a market-oriented economy has not yet taken place – many important companies in the electricity, telecommunications, cotton and shipping sectors have not yet been privatised. Reforms have been formulated but have yet to be implemented. President Boni Yayi, who has been in office since the beginning of April 2006, has the goal of lifting Benin out of poverty and making it into a newly industrialising economy. The far-reaching privatisation of state-run companies is planned by the end of the decade.

Foreign-trade dependency on cotton, which accounts for 70 to 80 per cent of export earnings, is proving a disadvantage here. Heavily subsidised cotton farming and export activities conducted by some industrialised countries, and above all the USA, exert a downward pressure on prices, pushing them well below the production-cost level. Together with Burkina Faso, Niger and Chad, Benin is thus calling on the World Trade Organization (WTO) to take action against this subsidisation policy. These West African countries can count on Germany's support in this matter. The EU led a move towards a partnership agreement with cotton producing countries in Africa which was concluded in April 2004. It supports these countries in their negotiations with the WTO and provides assistance on the ground in building a sustainable, competitive cotton industry. The EU has reformed its cotton policy regime, de-coupling 65 per cent of cotton subsidies from cotton production quantities and thus setting an important example.

Among the major challenges facing the government is improvement of the education system. More than 60 per cent of Benin's people are illiterate. Primary school attendance has been made free of charge since the start of the 2006/2007 school year. This new development has brought about an increase in the numbers of children attending school. Germany, along with other donors, is assisting Benin in the implementation of its national education plan. The country has a realistic prospect of achieving the Millennium Goal of "Education for All".

Development potential

In spite of these problems, Benin does have potential for development, primarily in the agricultural sector. This sector generates more than one third of gross domestic product (GDP) and yet only covers one sixth of the country's total surface area. More areas could be farmed, and more crops grown, in order to increase production. The most important aspect here is ensuring ecologically sound agriculture that will not aggravate existing environmental problems. Also, more agriculture means more jobs, which would benefit the fast-growing population. Another area with development potential is the wood and forestry sector, where the certified reforestation and processing of high-value woods such as teak is a viable option.

The government wishes to promote the development of the private sector and has set up a national micro-finance fund for this purpose. There is also to be a reform of land law.

There are numerous non-governmental organisations in Benin that are acknowledged and taken seriously by the government. The organisation "Freedom House" has rated Benin as one of only few African countries to guarantee full political freedom. Freedom of the press is one of the major rights guaranteed in the country.

Priority areas of German cooperation with Benin

At the governmental negotiations in November 2008, a total of 48 million euros was pledged to Benin for 2008 and 2009. Of this, 28.5 million euros were for Financial Cooperation and 19.5 million euros for Technical Cooperation.

Agreement has been reached with the government of Benin on the following priority areas of development cooperation:

• Decentralisation and municipal development

• Environmental protection and sustainable use of natural resources
  in rural areas

• Integrated management of water resources, provision of drinking water, and sanitation

Benin's political and economic reform efforts were acknowledged at the end of 2006 through the granting of budgetary aid. This direct financial support for Benin's budget is intended to contribute towards improving the effectiveness of development cooperation in line with the Paris Declaration. The grants are linked to specific conditions related to ongoing policy progress, transparent budgetary mechanisms and increased efforts to combat corruption. They are made subject to the approval by Germany’s federal parliament, the Bundestag, of the relevant budget.

During an official visit to Benin in January 2009, State Secretary Erich Stather formally opened the German House in Cotonou, where the implementing organisations GTZ, KfW Entwicklungsbank (development bank) and the German Development Service (DED) have their offices.

Decentralisation and municipal development

France, the former colonial ruler, has left many traces in Benin. State structures, for instance, are centralistic in keeping with the French model. Reforms targeting the dismantling of the central state are now underway, and decentralisation constitutes a key component of ongoing administrative reform.

Since the inauguration of the first mayors in March 2003, both the new municipalities and the centralistic government authorities have been helped to make the transition to local self-government. Municipal elections took place for the second time in April 2008 – a sign of growing democratic stability and the consolidation of the decentralisation process.

Local government employees receive training in the context of development cooperation. The idea is that they learn to develop new sources of income, to provide necessary services to local people and to boost the local economy. The local population is informed about the possibilities they have for participation, and investment is also flowing into the municipalities. Thus German development cooperation is financing parts of the local infrastructure, such as market places, bus stations, streets and schools. Rational organisation structures coupled with control mechanisms are designed to reduce the susceptibility to corruption amongst officials in the public administration. Civil society is also to develop more easily and in more diverse ways at community level. The objective here is citizen-oriented local politics.

The municipal authorities are not yet able on their own to fulfil the tasks entrusted to them by law in most domains because there is not yet sufficient financial capacity or staff expertise available. In addition, there has only been a partial transfer of responsibility and financial resources to the municipalities so far. In June 2007, a ministry responsible solely for decentralisation was brought into being. It is headed up by an experienced politician who has provided advice and support for the process of decentralisation since the 1990s. This change may give the reform process fresh impetus.

Integrated management of water resources and drinking water supplies

Water supply is an important theme of development cooperation between Germany and Benin. In 2006, around one third of the population had no access clean drinking water. In rural areas, many people draw water from open wells; this water often contains bacteria and germs. Only about 10 per cent of the rural population has access to sanitary facilities. Water supply companies do not have an adequate technical infrastructure and have not always worked efficiently in the past.

The common goal agreed with partners in Benin is to make a significant improvement to the quality of drinking water and hygienic conditions by the year 2015, and to provide at least 75 per cent of the population with reliable access to drinking water. This commitment is part of the planning framework for water management that Benin has set up and which provides orientation for all donors.

The water supply programme is aimed at expanding and improving the technical infrastructure. A unitary, country-wide model has been devised for this purpose in close consultation with all the relevant actors. It is oriented towards demand and promotes a sense of responsibility among the end users while also seeking to safeguard the sustainability of investments.

Water pipes are being renewed and extended in numerous cities. New pumps are also being installed. Water is distributed at central pumps and company staff provide information about the links between contaminated water and disease as well as about the necessary hygiene. New foot- or hand pump-operated tube and dug wells are being installed in villages and damaged wells repaired. Sanitary facilities are also being erected – up to now many villages have had no such facilities. The new state water company is receiving support in the efficient planning of drinking water supplies and in regulating water quality testing. These improvements in infrastructure will prove of greatest benefit to Benin’s women, who are traditionally responsible for their family's supply of water.

There is a real prospect that the number of people without long term reliable access to hygienic drinking water in Benin can be halved by 2015. This is one contribution to the Millennium Development Goals. It would mean a connection level of 75 per cent in the cities and rural areas alike.

Environmental protection and sustainable use of natural resources

The agricultural and forestry sectors are pillars of Benin's economy and indeed are regarded as crucial to growth and diversification in Benin's new poverty reduction strategy. Since no other income-generating sectors exhibit a sufficient level of development as yet, pressure on the environment is mounting steadily. Every year, some 700 square kilometres of forest are cleared, and arable land is losing fertility. Yields are declining due to inappropriate use. The aim of German development cooperation is to enable the rural population to derive greater benefits from the sustainable management of natural resources. One way it seeks to do this is by spreading knowledge about improved methods and processes for sustainable resource use.

Traditional land-use rights have a decisive impact on the way people treat their environment. Only very few people have official, secure land titles. Plots of land are allocated on a tenuous basis that is re-negotiated each year. The upshot: a large number of latent or even open conflicts between various groups of users. In October 2007 the law on rural land rights was promulgated. The new statutory framework integrates elements of traditional land law as well as enabling women to become owners of land. This is a major success for German development cooperation. Alongside the adoption of various procedural regulations, this creates the foundation for producing land registry plans and allocating ownership rights in rural areas.

German development cooperation with Benin aims to improve communication between the government, farmers' organisations, women's associations and private service providers. Furthermore, civil society groups actively helping to protect the environment on the spot are also receiving backing. Uncontrolled logging is being stopped, new forest use options developed and existing production methods adapted to the demands of environmental protection.

Debt relief

Benin submitted its preliminary Poverty Reduction Strategy Paper (PRSP) in June 2000 and reached the decision point for the HIPC Initiative the following month. The government adopted the full PRSP in September 2002. In March 2003, Benin became the eighth country in Africa to reach completion point under the enhanced HIPC Initiative. As a result, Benin had around 460 million US dollars of debt cancelled.

The second edition of the poverty reduction strategy (Stratégie de Croissance pour la Réduction de la Pauvreté, SCRP) in 2007 made further debt reduction possible and provides a basis for cooperation with the World Bank and the International Monetary Fund (IMF). It essentially contains five components: boosting economic growth, developing the infrastructure, strengthening human capital, good governance and regional development.

last changed: March 2009