Situation and cooperation

Children in Benin

The transition from socialist one-party rule to democracy in Benin was a peaceful one, and was seen as setting an example in Africa. But the West African state has been slow to implement the reforms that are so vitally needed to jump-start the economy and reduce poverty. The public financial management system in particular is inefficient and lacks transparency.

In economic terms Benin is highly dependent on its larger neighbour, Nigeria. The vast majority of goods transhipped in the port of Cotonou involve business with Nigeria. Benin is also an important transit country for Niger, Burkina Faso and Mali. The trade at the country's ports is thus a mainstay of Benin's economy. Cotonou is home to the largest market for second-hand cars in all of West Africa. Almost half of Benin's tax revenue comes from customs duties, most of them levied at the country's ports.

A truck loaded with cotton in Benin

The second important pillar of Benin's economy is agriculture. It contributes one third to gross national product. The most important export crop by far is cotton. However, Benin is only a minor player in the global cotton market. The country's cotton farmers have hardly any hope of competing with the large, highly subsidised producers in other countries. The sector also faces problems within Benin itself, for instance when it comes to treating and processing the raw cotton.

Benin's industrial sector is not particularly well developed and focuses mainly on cement production, cotton ginning and wood processing.

Benin is making efforts to attract foreign investors to the country, pointing to its stable political situation and its membership in regional economic organisations. In 2012 Benin's President served as Chairperson of the African Union. The country is also a member of the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (UEMOA). The World Bank's Doing Business Report 2015 shows that the investment climate has improved. Benin now ranks 151st of 189 countries. However, this is mainly due to the improvement of port infrastructure in Cotonou. But investors are still deterred by corruption, legal uncertainty, a slow and inefficient bureaucracy, and the lack of infrastructure, particularly in the energy and telecommunications sectors.

In the past few years, Benin has been able to improve its ranking on the Corruption Perceptions Index (CPI) of the non-governmental organisation Transparency International, moving up to 80th place on the list of 175 states in 2014 (2012: 94th).

Poverty reduction

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. The high rate of population growth (about 2.7 per cent) is hampering progress in this field. Around one third of the population lives below the poverty line. According to the current Human Development Index (HDI), Benin ranks 163rd of the 189 countries listed.

Starting in 1999, the government of the country initiated a series of national programmes aimed at implementing its poverty reduction policy. In 2011 Benin adopted its third poverty reduction strategy paper (Stratégie de Croissance pour la Réduction de la Pauvreté, SCRP). Initial improvements can already be seen in the fields of health, education and water supply.

Reducing poverty despite the high population growth rate would require an economic growth rate of at least 7 per cent. In recent years, though, the growth rate has only been fluctuating between 3.3 and 5.6 per cent. It is expected that the growth rate in the coming years will be about five 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 are still managed by the state. The cement industry has now been privatised. It is profitable and developing well. There are plans for far-reaching privatisation of state-run companies by the end of the decade.

Among the major challenges facing the government is improving the education system. Almost 60 per cent of Benin's people are illiterate. Since primary schooling was made free of charge, enrolment rates have rocketed and now stand at 95 per cent. However, some 29 per cent of children drop out of primary school, with girls disproportionately likely not to finish their primary schooling. Considerable improvements still need to be made when it comes to the quality of school and vocational education. Germany, along with other donors, is assisting Benin in the implementation of its national education plan.

Development potential

A worker in a cotton plant holding a basket of cotton

Apart from the service sector, it is especially the agricultural sector that has potential for poverty reduction. That is why the government has developed an agriculture strategy with the main goal of boosting performance in the agricultural sector. The cotton industry in particular, which is so important for Benin's economy and which has seen earnings fall over the last few years, is to be reinforced in future and reformed with the involvement of the private sector.

Germany is supporting these efforts through its bilateral cooperation programme with Benin, both as part of the priority area "Agriculture" and within the framework of its special initiative "One World – No Hunger". Farmers in Benin also benefit from BMZ support through the regional Competitive African Cotton Initiative (COMPACI) programme.

There are numerous non-governmental organisations in Benin; their work is respected by the government. In 2014 the organisation "Freedom House" rated Benin as one of only a few African countries to guarantee full political freedom. However, in its 2014 Freedom of the Press Index the organisation rated Benin as only "partly free".

Priority areas of German cooperation with Benin

At the government negotiations in September 2016, Germany pledged a total of 69.9 million euros for development cooperation with Benin for the period 2017 to 2019. Of this, 25 million euros was for Financial cooperation and 43 million euros for Technical Cooperation. In 2015, an additional 12.9 million euros was made available to modernise a hydropower station and to secure funding for the Pendjari Biosphere Reserve. A further 1.9 million euros was committed for programmes within the special initiative "One World, No Hunger".

Agreement was reached with the Government of Benin to continue working in the following priority areas of development cooperation:

  • Decentralisation and municipal development
  • Agriculture
  • Integrated water resource management, water supply and sanitation

In addition to these priority areas, Germany is also engaged in the fields of macroeconomic advisory services, primary education and energy supply.

Decentralisation and municipal development

Women at a village meeting in Kotokpa, Benin

France, the former colonial ruler, has left many traces in Benin. State structures, for instance, are centralistic in keeping with the French model. Reforms to remove these centralist structures have now been introduced. The National Decentralisation and Deconcentration Policy (PONADEC), launched at the end of 2010, is a major part of the ongoing administrative reform and is making headway, step by step.

This policy for the first time assigns key competences to the municipalities, particularly in the fields of basic education, health and water supply. The overarching goal is to effectively support poverty reduction and to establish modern, efficient local government.

As part of Financial Cooperation, the establishment of market squares and halls as well as municipal administration buildings has been supported through an infrastructure fund for mid-sized towns (FIVIS). All investment in local government is now channelled through the national fund for municipal development (FADeC). This fund is financed both by the Beninese government and by various international donors, including Germany.

Advice is being provided under Technical Cooperation to 25 municipalities to help them build self-government capacity and provide good basic services to the people.


A market in Cotonou, Benin

The agricultural sector is crucial for the success of Benin's poverty reduction strategy. German support in this sector aims to boost agricultural performance country-wide, in a way that is sensitive to environmental and climate-related issues.

Germany is supporting farmers in producing products such as rice, vegetables, shea butter and cashew nuts not only in order to meet their own needs, but also for market. The processing of agricultural produce is generating new jobs in the private sector, thus creating additional sources of income, mainly for women.

GIZ is fostering public-private cooperation in support of cashew farmers in Benin, Burkina Faso, Côte d'Ivoire, Ghana and Mozambique. The purpose of this initiative is to build capacity for the processing of cashew nuts in Africa, to develop sustainable value chains and to improve sector organisation and coordination. Since the project started in 2009, almost one third of all African cashew farmers have been trained.

Municipalities are being on advised on how they can support small farmers, for instance by repairing access roads or building local warehouses. Newly established and simple rural cadastres are regulating rights of ownership and use in villages, and preventing conflicts between the various user groups.

The BMZ is also supporting Benin through three additional programmes under its "One World – No Hunger" initiative.

The Food Security programme involves nutrition and hygiene education for food-insecure households and particularly vulnerable groups such as women and young children. The newly acquired knowledge will enable households to better ensure family members' food and nutrition security based on the resources available.

The Green Innovation Centres programme involves measures to foster innovation in the agricultural and food sectors in rural communities in Benin in order to improve smallholder income, employment, and the regional availability of food. The focus of the programme is on assisting farmers' associations.

The Soil Rehabilitation programme involves supporting small farmers in applying good practices for soil rehabilitation. Under the programme, the project for the adaptation of the agricultural sector to climate change is helping to improve natural resource management, especially the management of water and land, in areas affected by climate change in northern Benin.

Germany has been supporting the Pendjari Biosphere Reserve in the north of the country since 1996. By successfully involving the population, Germany has developed a model that other West African countries can use for the administration and utilisation of protected areas.

Integrated water resource management, water supply and sanitation

For this priority area, the German and Beninese sides have agreed that their goal is to significantly improve the quality of drinking water and hygienic conditions by 2015, and to provide at least 75 per cent of the population with access to drinking water. Considerable progress has already been achieved on this goal. As many as 69 per cent of rural people and 85 per cent of urban people already had access to safe drinking water by 2012. Germany's activities in the sector have helped give an additional 300,000 people improved drinking water sources.

The focus of the German programme is on upgrading management skills both at the national and the municipal level and on improving access to sanitation. So far, progress with regard to sanitation is not satisfactory.

German development cooperation is also helping to expand and improve technical infrastructure. The networks of water pipes in Benin's towns are being renewed and extended. New pumps are also being installed.

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