WT/TPR/S/27 Trade Policy Review
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IV. TRADE POLICIES AND PRACTICES BYSECTOR
(1) Introduction
1. Benin 'snatural resources, although varied, aregenerally speaking limited. They began tobe
exploited during thesocialist period fromwhich mostoftheexisting enterprises date. Byandlarge,
these enterprises havemanaged toadapt tothefreemarket principles introduced inconnection with
thestructural adjustment programmes, although theirsuccess indoing soremains fragile. Trade is
animportant activity (Chart IV.1) butoften consists incircumventing thetrade restrictions inplace
intheneighbouring countries. Asthese neighbouring markets areopened up,Benin 'scommercial
services sector, which accounts forasmuch as20percentofGDP, willhavetofindother outlets.
2. Trade policy hasnotbeen liberalized tothesame extent inallsectors ofactivity. The
manufacturing sector, including agri-food production, hasbeenextensively exposed tointernational
competition sincetheabolition ofquantitative restrictions onimports in1988andthelowering ofimport
duties in1994. These areessentially agricultural product processing industries which areapparently
developing without being directly subsidized. Ingeneral, these industries areprofit making andhave
beentherecipients ofmostofthemodest investment made recently. Certain commercial services (for
example, roadtransport, transit, wholesale andretail trades) arealsoopentocompetition. Thecotton
sector continues tobeState-controlled, although private ginning mills were authorized in1996.
3. Most oftheother service industries arewholly protected fromcompetition, which isdelaying
adaptation tonewtechnologies andmarket development, especially intelecommunications. Similarly,
thesupply ofservices inthebanking, insurance andairtransport sectors isnotwelladapted totheRepublic ofBenin WT/TPR/S/27
Page 51
demand; highprices arepossible because ofexclusive domestic andforeign-trade rights. The
consequences, interms ofcostandefficiency fortheeconomy asawhole, illustrate theneedtoapply
thederegulation which hasbeensuccessful inother sectors tothese segments oftheeconomy also.
4. Many activities arebeing carried onwithin alegal andregulatory framework intransition.
Insectors asvitalasthedistribution ofpharmaceuticals, petroleum products, fertilizers andpesticides,
andtelecommunications equipment itisessential toestablish regulations which satisfy health andpublic
safety requirements, while avoiding theprivileges associated withexclusive importation ordistribution.
5. Ingeneral,despitetheconsiderableeffortsmadesince1990toestablishaninstitutionalframework
adapted toamodern market economy, serious weaknesses persist. Many activities remain under State
control. Private activity isrestricted bynon-existent oroutmoded legislation which discourages private
investmentwhileallowingcertaininterestgroupstoexploitdominantpositions.Inthiscontext,measures
designed tostrengthen thelegalandjudicial framework might bethebestwayofmaking more ofthe
country 'sresources.
(2) Agriculture, fisheries, forestry andrelated industries
(i) Agriculture andagro-industry
6. Together withtrade, agriculture isthecountry 'sprincipal economic activity, providing about
70percentofemployment andmorethan90percentofexport earnings. Involume terms, theprincipal
crops arecotton, cassava, maize andyams (Table IV.1). Thevalue-added intheagricultural sector,
including fisheries andforestry, hasbeenestimated atCFAF 428billion for1995(37percentofGDP).
Itsaverage realgrowth between 1992and1996wasnearly 5percent,slightly higher thanthegrowth
recorded forGDP asawhole. Cotton accounts foralmost alltheexport earnings.
7. After triggering aninitial increase inprices, thedevaluation ofJanuary 1994 wasfollowed
byadecline inthevalue offoodstuff imports from countries outside thefranc zone. Given thatthe
Nigerian Naira wassimultaneously devalued byasimilar amount against theUSdollar, thecross-border
agri-food trade doesnotseem tohavebeenaffected bythecurrency changes, especially asmost of
thistradeisconducted onanon-monetary barter basis. Ontheother hand, thetradehasbeenseriously
affected bythechanges intrade regulations.1
8. Contrary tothegeneral expectation, following devaluation, overall foodproduction stagnated
in1994anddidnotincrease significantly in1995, which ledtoserious foodsupply problems in1996.
Infact,because ofthelackofcereal storage capacity, difficulties withpreserving certain perishables
andthehighcostoftransport forfarmers duetothepoorstateoftheroads, mostofthefoodconsumed
inrural areas isproduced onthespotandtrading foodcropproducts between zones withasurplus
(orforeign countries) andthose where there isashortage isdifficult andunprofitable.
1Uptoaquarter ofBenin 'sfoodimports aredirectly re-exported toNigeria onaninformal basis, since the
products inquestion areprohibited imports inNigeria and,byagreement between thetwocountries, prohibited
exports inBenin. Nigeria 'sliberalization ofriceimports in1996 hasresulted inthehalving ofthistrade, which
illustrates thedependence ofBenin 'strade onNigerian trade policy.WT/TPR/S/27 Trade Policy Review
Page 52
Table IV.1
Production offoodcrops andmajor cashcrops, 1989-1996
(000tons)
1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96
Food crops
Maize 424 410 431 460 483 492 563
Sorghum 106 99 115 110 106 113 119
Millet 23 22 27 26 24 25 25
Paddy rice 9 11 10 11 12 14 18
Total cereals 562 542 583 607 625 644 732
Cassava 977 937 1,046 1,041 1,147 1,146 1,329
Yams 1,010 1,046 1,178 1,125 1,185 1,250 1,288
Beans 49 48 55 62 58 65 63
Cash crops
Palm nuts(fruit) 55.0 ... ... ... ... ... ...
Palm nuts(kernels) 9.0 ... ... ... ... ... ...
Seed cotton 104.7 146.1 177.1 162.0 277.5 266.4 345.0
Groundnuts 69.2 63.9 74.1 73.7 73.8 77.6 ...
Shea nuts 1.5 5.8 5.0 ... ... ... ...
Coffee 0.3 0.2 ... ... ... ... ...
Tobacco 0.4 0.3 0.3 0.5 0.2 0.3 0.3
...Notavailable.
Source: Beninese Government.
9. Onereason forthefeeble increase infoodcropproduction maybetheGovernment decision
toraise theadministered producer prices forcotton by50percentbetween 1994 and1996 while
maintaining theother administered prices attheiroldlevels. Asindicated byChart IV.2, thisincrease
wasfarfromreflecting world pricetrends. Theproducers increased cotton production tothedetriment
offoodcrops whose prices, notadministered bytheState, hadnotrisen tothesame extent. Inthis
context, in1994, theGovernment tookatemporary decision (stillinforce inApril 1997) toprohibit
exports offoodcropproducts inorder toensure foodsecurity. Theagricultural products traditionally
exported byBenin 'sfarmers (food crops andunginned cotton) gototheneighbouring countries and
thetransactions aregenerally informal, which mayhaveweakened theeffect oftheban.
10. TheStateintervenes byadministering prices inseveral agricultural sectors, including export
sectors (Table IV.2). Despite therecent increase, cotton producer prices remain wellbelow world
levels.2Thesector issubject tolevies which represent onefifthoftheState budget. However, the
Government 'sobjective remains "toraisethestandard ofliving oftherural population bywinning
2Forexample, inthecaseofcotton, in1994/95 theproducer price wasCFAF 140perkg.,theequivalent
of304francs ofginned cotton (assuming areturn of46percent). In1995, theaverage world price forcotton
wasaboutUS100centsperpound,or220centsandCFAF1,100perkg.(basedonanexchangerateofCFAF500
perUS$andapound-kg. conversion rateof0.45359). Thisdifference isillustrated inChart IV.2.Republic ofBenin WT/TPR/S/27
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markets andbyimproving thecompetitiveness oftheBenin farmer rather thanbyseeking mere
self-sufficiency infoodattheregional ornational level".3
Table IV.2
Producer price forthemajor cashcrops, 1989-1996
(CFAF/kg.)
1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97
Palm nuts(fruit) 30 30 35 35 30 30 ... ...
Seed cotton
Topquality 100 100 100 100 110 140 165 200
Medium quality 75 80 80 80 95 95 135 150
Groundnuts, not
shelled50 65 65 85 85 85 ... ...
Shea nuts 20 40 40 40 30 30 ... ...
Cashew nuts 90 100 115 115 115 115 ... ...
Coffee
Topquality 160 160 140 115 115 115 ... ...
Medium quality 100 100 90 60 60 60 ... ...
Tobacco
Topquality 135 135 135 135 135 135 ... ...
2ndquality 115 115 115 115 115 115 ... ...
3rdquality 70 70 70 70 70 70 ... ...
...Notavailable.
Source: Beninese Government.
11. Mostoftheagricultural production (except forpalmoil)comes fromsmall individual producers.
Thelatterare,inprinciple, supported bythestaffoftheRegional Action Centres forRural Development
(CARDER) who,inparticular, provide alltheinputs, insome cases oncredit. Most oftheagricultural
development projects forwhich theCARDER areresponsible arefinanced fromexternal sources and
continue tofocus mainly oncotton production.
12. TheState'scontributiontothefinancingofagriculturaldevelopmentprogrammesseemsrelatively
modest ascompared withthetaxeslevied onthecotton sector.4Thus, itseems thatagricultural incomes
might benefit from alower nettaxtake, intheabsence ofmore substantial State financial support.
Moreover, thepresent allocation ofaidforagriculture seems tobeconcentrated oncotton and,
consequently, incomes remain heavily dependent onthissingle basic product.
13. Theimport duties andtaxes (fiscal duty, community solidarity levy) seem tobedictated by
theexistence ofaninformal transit trade rather thanintended toprotect domestic production. For
example, despite theexistence oflocalproduction thedutyonriceiszeroinorder nottoimpede the
re-export trade. VAT, at18percent, isnotapplied tothefollowing: cereals, wheat flour, bread,
3Ministry ofRural Development (1995), Table ronde dusecteur rural. Therestofthissection islargely
based onthissource.
4Forexample, in1995, public investment expenditure onrural development amounted toCFAF 16billion,
or22percentoftotalState investment expenditure. Ofthistotal, CFAF 62billion wasfinanced from external
sources. Thelevies onthecotton sector amounted toCFAF 24billion.WT/TPR/S/27 Trade Policy Review
Page 54
maize, seedpotatoes andvegetables, cocoa, fishandfoodindustry waste, breeding animals, tobacco
andmilk. However, despite theexistence ofthetransit trade, VATiscollected attheborder onimported
rice.5
14. Most farms were created ornationalized under theprevious regime andarecurrently under
thesupervision oftheMinistry ofRural Development. Itseems thatsince 1985, these farms have
notbeenmaintained. Pursuant toadecree issued in1991, these farms aretoberedistributed tothe
unemployed ortovolunteer civilservants wishing toinvest inagriculture.6TheGovernment 'sstated
priority, however, istopromote thisinvestment "through aprogramme fortheintegration ofyouth
inagriculture".Finally,itappearsthattheStateiscurrentlyseekingdomesticorforeignprivateinvestors
torehabilitate andrunthem.7According totheauthorities, under thepresent system oflandtenure
based onprivate property, aforeign investor canfreely purchase agricultural land.8
15. Many aspects oftheregulations inforce arenotclearandthelegislation sometimes seems to
conflict withtheGovernment 'sstated objectives. Forexample, according totheChamber ofTrade
andIndustry ofBenin, agricultural investments arenoteligible forthepreferential regime under the
Investment Code (seeChapter II).9Atthesametime, private, inparticular foreign investment incotton
production isprohibited. Insome cases, thelegislative framework appears nottohavebeendefined.
Forexample, theredonotyetseemtobeanyregulations governing thetransfer oftitletotheoldState
farms. Agricultural products canbepurchased fromtheproducers onlywithanagricultural product
purchasing cardwhich isissued exclusively toBeninese residents orcompanies.
16. Theencouragement ofprivate investment intheagri-food industry isanother Government
priority. Several plants dating from theplanned economy period (forexample, tomato concentrate,
mango preserves, sugar, maize processing, cashew-nuts) arecurrently seeking private capital
(Table III.4). Although theinvestment might beprotected byrelatively highimport duties onlegally
imported competing products, byrelief forimported inputs andbytaxexemptions (Chapter III(2)(ii)(d):
Tariff andtaxexemption, oncetheenterprise hasbeenestablished, itsproduction would beexposed
tocompetition from theforeign products imported informally, thatiswithout paying tax,available
ontheBenin market.
17. Assuming thatthebanontheexport offoodcropproducts (seeabove) islifted, thedevelopment
ofnewagri-food export outlets might benefit from simplification oftheadministrative andcustoms
procedures. Foreachshipment itisnecessary toobtain apermit fromtheMinistry ofTrade, Handicrafts
5Since theliberalization ofriceimports intoNigeria, theoperators have nolonger been abletore-export
under theVAT regime inforce, andatthebeginning ofSeptember 1996, 36,000 tonsofricewere reported to
besitting inwarehouses intheportofCotonou. Inorder toenable outlets tobefound forthestocks, theauthorities
have apparently authorized anabatement equal to40percentofthec.i.f. value ofimports, which hasledto
aCFAF 800million fallincustoms revenue (LaLettre Afrique -Expansion, 20January 1997).
6Decree No.91-31 of14February 1991.
7Jeune Afrique, 3March 1997.
8LawNo.61-26 of10August 1961 concerning thedefinition andarrangements forthedevelopment ofrural
planning andmanagement areas, andLawNo.65/25 of14August 1965 ontheorganization ofthelandtenure
system inDahomey.
9Chamber ofTrade andIndustry ofBenin (1995), p.29.Republic ofBenin WT/TPR/S/27
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andTourism, issued automatically forstatistical purposes. Road taxes andshipper 'scharges canalso
addtothecostofBeninese products onexport markets.
18. Thedevelopment ofthebasicinfrastructure (roads, markets, storage units) isanother condition
ofagricultural development. Despite recent progress, theauthorities stress theneedtobuild9,000 km.
ofroads toserve theruralareas. Another Government priority istobuild warehouses, asfoodstorage
losses sometimes exceed onethirdofthevolume stored.
(a) Cotton sector
19. Since cotton began tobegrown in1960, production hasfluctuated considerably asaresult
ofchanges indevelopment strategies andimprovements invarieties andfarming techniques. Thevery
significant progress inseedcotton production since1982canbeattributed totheimproved organization
ofthecotton sector withaproducer pricethatregularly increases; unfavourable selling prices forfood
cropproducts; thelackofother profitable andorganized sectors; andbetter application ofthe
recommended techniques, which hasledtoanappreciable increase inyields andhence income. At
present, thecotton sector accounts for20percentofGDPandmore than90percentofexport earnings.
20. Producer prices areestablished bytheGovernment (Chart IV.2) soas"tomaintain thesector
inbalance"(BoxIV.1).In1995,cottonexportsworthCFAF95billiongeneratedaboutCFAF38billion
inincome fortheproducers andCFAF 24billion inrevenue fortheGovernment, theremainder being
shared among traders, ginning mills andinput suppliers.
WT/TPR/S/27 Trade Policy Review
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BoxIV.1: Pricing mechanism inthecotton sector
Theproducers areguaranteed afloor price forseedcotton purchases, generally extending over several
seasons, toprotect them from world price fluctuations. Itiscalculated onasectoral balance basis while
ensuring theproducers aminimum income foraday'swork equivalent totheaverage daily costoflabour
intherural areas. Theprice alsotakes intoaccount thecapital invested, thecostoftheproduction
factors forcotton growing, andtheconditions andprices ontheworld market.
Theprices ofseed cotton andfertilizer areestablished byanational commission which includes rural
producers aswellasrepresentatives ofthePresident 'sOffice, theMinistries andtheChamber ofTrade
andIndustry. TheCommission ispresided over bytheMinisters ofTrade (Chairman) andRural
Development (Vice-Chairman).
When themarket price issuch thatitispossible tosellataprofit, aportion oftheprofits isplaced in
reserve intheStabilization andSupport Fund instead ofbeing distributed immediately. When theselling
price fallstothepoint atwhich losses arebeing incurred, theFund disburses partoftheamount placed
inreserve tosupport andmaintain thepurchase price atalevel economically tolerable fortheproducers
overtwoorthree seasons. However, ifselling prices continued tofalloveralongperiod, thereserves
would beexhausted andtheorganization responsible forsupport andstabilization would beobliged to
lendmoney tomake uptheshortfall and/or torecommend adownward revision ofpurchase prices.
When itpurchases seedcotton from theproducers, SONAPRA paysa"floor price" which constitutes the
minimum thattheproducer needs tocover hisexpenses (fertilizer, insecticides, etc.) andtohave an
income equivalent totheminimum rural income. Thisprice ispaidwhatever theresults ofthecotton
season; itcanonly vary iftheprice ofagricultural inputs ortheselling prices ofcotton fibre onthe
world market riseorfallbymore than10percent.
Thestabilization rules provide that, after ginning andthesaleofthefinished product andiftheseason is
inprofit, some oftheprofits maybeallocated totheproducer; theallocation ofthisshare oftheprofits
totheproducer makes itpossible topayhimaprice supplement ontopofthe"floor price" which he
receives atpurchase. Thissupplement isintended toimprove hisincome. Itistaken outoftheyear's
profits fordistribution during thefollowing year.
Therules alsoprovide thatonce thefinalresults areknown andshow thataprofit hasbeen made, partof
theprofit maybepaidouttoalltheproducers. This seasonal "surplus" isshared outasfollows: the
State takes 40percentofthenetprofit after tax,andofthebalance 30percentgoes totheproducers,
40percenttotheStabilization andSupport Fund, and30percenttoSONAPRA.
Source: Beninese Government.
21. Despite thisdistribution ofearnings, cotton isthefarmers 'most profitable activity. Thus,
theproducer floor price isdetermined annually bydecree andguaranteed atthestartoftheseason.
Producers havetheassurance thatalltheirproduction willbebought atthatprice bythemills ofthe
SONAPRA which isState-owned. Alltheinputs aresoldtothefarmers under thesupervision of
SONAPRA which entirely manages most oftheproduction inconjunction withtheCARDER. A
supplement calculated inaccordance withapre-established scale ispaidtotheproducers when
SONAPRA 'searnings exceed expectations.
22. Theproducers canalsosellpartoftheirproduction totheprivate ginning mills setupsince
1996. SONAPRA hasa35percentstake inthenewprivate companies. Atpresent, theprivate sector
isreported tohaveacapacity of75,000 tonsoutofatotalof345,000 tonsofcotton ginned in1995-1996.
Theprivate cotton ginning enterprises areobliged topurchase their rawcotton exclusively fromRepublic ofBenin WT/TPR/S/27
Page 57
SONAPRA atprices established bythelatter. Theprivate ginning mills areexempt fromdirect and
indirect taxes (VAT andBIC).
23. Ingeneral, SONAPRA andtheprivate mills sellcotton onaf.o.b. portofCotonou basis.
Exports, arranged byprivate traders approved bytheMinistry ofRural Development, gomainly to
Brazil, China, other countries oftheFarEast, Europe andAfrica. Onetenth ofoutput isconsumed
bylocalindustry.
24. TheGovernment 'sobjective istodouble cotton production toreach 450,000 tonsofrawcotton
bytheyear2000. However, guaranteeing thepermanence ofthenational environmental heritage is
alsoadeclared priority oftheGovernment.10Thecotton sector istheonlyonewitharelatively large
amount ofinputs supplied togrowers oncredit bytheState atprices established bydecree atthe
beginning oftheseason. According totheauthorities, fertilizer consumption hasnotyet,onaverage,
reached therecommended level, particularly asfertilizer prices haverisen following thedevaluation
oftheCFA franc. Asaresult, thesoilisbeing exhausted andthis,inthelongterm, could posea
threat totheproduction ofcotton itself. Formostcotton producers, intheshortterm, theleastexpensive
system isstillclearing newland.11
25. Chemical pollution istheother externality generally associated withcotton growing, which
requiresparticularlylargeamountsofpesticides.12Thesecanenterthebloodstreamdirectly,forexample
through contact inthefields, orindirectly asaresult ofthepresence ofresidues inwater orfood.
Infact,according totheauthorities, Brazil hasalready refused entry tosome cotton imports fromBenin
because ofthepresence ofpesticide residues. Analternative would betodiversify production towards
"bio" cotton, byusing biological insecticides, which would make itpossible toreduce theintensive
useofchemicals.13Measures ofthistype,however, involve initial investment intraining forthefarmers
andinresearchanddevelopmentrelatingtoinputs,whichbecauseoffinancialconstraintstheGovernment
doesnotatpresent envisage.
26. More generally, thepresent lackofdiversification beyond thecotton sector isaconsequence
oftheundertaking topurchase theentire output atguaranteed prices andtheavailability ofcredit.
Atthesame time, other branches ofagriculture arefailing todevelop because ofuncertain markets
andlackofcredit. According totheauthorities, there isanurgent needtobuild upthese branches,
starting withthose which could bebetter developed inthecotton growing regions, soastorelieve
thatsector byattracting producers inmarginal cotton areas toother crops, thusenabling themtoearn
amore secure living from avariety ofsources.
10Ministry ofRural Development (1995).
11Since 1996/97 theState hasbeen encouraging theuseoffertilizers bymeans ofsubsidies (about 15per
centoftheprice).
12UNCTAD (1995).
13Integrated PestManagement isbased oninteractions within theagro-ecological system andreduces the
useofchemicals bycombining techniques intended forcontrolling sanitary andphytosanitary diseases, insects
andother agricultural pests. Themethods employed include labour-intensive manual control techniques and
biological control techniques involving thebreeding anduseoforganisms thatprey onharmful insects.
(UNCTAD (1995)).WT/TPR/S/27 Trade Policy Review
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(b) Other agricultural andagri-food production
27. A15-year master plan, launched inApril 1994, provides foraresearch effort todevelop, in
parallel withcotton, efficient varieties ofoilpalm andcoconut palm. Palm oilexports havebeena
major economic activity. Atpresent thecountry isbarely self-sufficient. Thedifficulties relate to
thelackofmaintenance oftheplantations, which initsturnappears tobelinked totheproblems of
defining theownership oftheland.
28. Ingeneral, thesmall producers sellpartoftheirproduction totheSociété nationale pour
l'industrie descorps gras(SONICOG) which operates three palm oilmills, anedible oilrefinery, a
palmkernel oilmillandagroundnut oilmill. SONICOG alsoproduces soap. Theproducers arenot
obliged toselltoSONICOG andnon-industrial production isrelatively important. Thedevaluation
oftheCFA franc hasmade itpossible toreduce local unitproduction costs while raising theprice
ofcompeting imports. InFebruary 1997theGovernment wasseeking purchasers forthiscompany.
29. Intheopinion oftheauthorities, horticulture, inparticular mangoes andfresh pineapples, has
considerabledevelopmentpotential.TheGovernmentisawareoftheneedtodevelopcompletemarketing
channels, including access tocultivatable land, credit, inputs, packaging androadandairtransport
(see(5)(i)(d) below: Airtransport). In1996, there wereonly90hectares ofpineapple plantations,
withexports ofabout 200tonspermonth being shipped toFrance andBelgium. TheGovernment 's
objective istoincrease pineapple exports ten-fold bytheyear2000.
30. According toastudy ofthesector, theSociété agricole industrielle etdetransformation (SAIT)
produces andexports pineapple juiceattheregional level. Theobstacles encountered bythiscompany
include aninadequate supply offreshfruitandthedifficulty offinding bankfinancing foritsworking
capital. Itseems thattheenterprise, which hadaturnover ofCFAF 33million in1994, wasnot
registered either withtheDirectorate ofTaxes ortheMinistry ofTrade, Handicrafts andTourism.12
31. Given substantial investment, thecashew nutplantations could, according totheauthorities,
alsobecome aprofitable export sector. Cashew nuttreescanbegrown incombination withcotton.
Therehabilitation ofthesector should include, among otherthings, thefinancing ofunitsforprocessing
cashew nutsforexport, since theprocessing plant dating from theplanned economy period hasbeen
shutdown anddoesnotseem tobeworth rehabilitating.
32. Theapproximately 75,000 tonsof(hill) riceproduced covers about 10percentofdomestic
consumption. TheGovernment intends toextend thecultivated areaby20percentbetween the1995/96
and1998/99 seasons. Theprice ofimported riceistwice thatofriceproduced locally, which isa
reflection ofthedifference inquality. TheGovernment istrying toencourage production bydeveloping
irrigated plots. Riceimports, which peaked at164,000 tonsin1993, aremainly re-exported informally
toNigeria. Theelimination ofimport restrictions onricehasconsiderably reduced theNigerian demand
forriceintransit through Benin, since theoperators canimport directly through theportofLagos.
33. Amongotheragri-foodactivities,twomillssharetheproductionofwheatflourwhich,following
devaluation, isreported tohaveincreased by36percentin1994, toreach over11,500 tons. Flour
production isexempt from VAT andprotected by16percentcustoms duties. Theauthorities have
noted theexistence ofapromising export market forcassava. However, cassava exports areprohibited
because ofthebanontheexport offoodcropproducts.
12Société françaisedeconseil endéveloppement (1994).Republic ofBenin WT/TPR/S/27
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34. TheSociété béninoise debrasserie (SOBEBRA) owns abrewery andtwoaerated beverage
plants andhasbeenmaking aprofit since privatization in1994. TheStatenowhasonlyan8percent
stake inthiscompany, 20percentofwhose shares werereserved fornationals atprivatization. There
isatobacco industry which isabletocompete withimports despite thelowleveloftariff protection
(thefiscal dutyvaries between 5and10percentbutmostcigarettes areimported informally andhence
without payment ofduties ortaxes).
35. In1990, 99percentoftheSociété béninoise detabac (SOBETA), which accounts fortheentire
output ofthesector, waspurchased bytheRothmans group. SOBETA exports 90percentofits
production andimports mostofitsinputs. Devaluation increased therelative burden ofthecompany 's
foreign-currency loans, atatimewhen rising prices werereducing theoverall demand forcigarettes.
(ii) Livestock production
36. In1994, livestock production (Benin hasabout amillion bovine cattle, twomillion small
ruminants, 400,000 pigsand10million poultry) represented about 4percentofGDP andaquarter
ofprimary sector production. Thelackofwater andtheresulting transhumance arethemainobstacles
tothedevelopment ofthissector. In1994, meatproduction, estimated at30,000 tons,wassupplemented
by2,500 tonsofimports. Milkproduction (40,000 tonne sofmilkin1994) isnotsufficient tomeet
thedomesticdemandfordairyproductsbecauseoftheextensivestock-farmingconditions.Dairyproduct
imports amount toabout 8,000 tonsayear.
37. Theauthorities havenoted thedepressing effect ontheBenin market ofsubsidized meatimports
from theEuropean Union. Theimport duties onmeatandbasic dairy products arelessthan10per
cent.
(iii) Fisheries
38. There aremorethan50,000 fishermen inBenin andfishing represents about 2percentofGDP.
Fishery products provide almost 40percentofanimal protein consumption. Thepotential domestic
demand, measured interms ofdailyfoodprotein requirements, isestimated atover70,000 tons,whereas
production amounts toabout 10,000 tonsforsea-fishing and30,000 tonsforfresh-water fishing. Benin
imports about 12,000 tonsoffrozen fish.
39. Thenon-existence ofup-to-date lawsandregulations onfishing activities ismaking itdifficult
toadminister thesector. Themain problems arethelackofdomestically owned vessels suitable for
sea-fishing andtheover-exploitation oflakes andlagoons which arebecoming silted upasaresult
oferosion.
(iv) Forestry andwood products
40. Theforests ofBenin supply 90percentoftheenergy consumed, intheformoffirewood and
charcoal usedforpreparing food. Thisisaccelerating thedeforestation process, asituation which is
further aggravated bythesettlement ofmigrants intheforest areas, transhumance andlandclearing
forfarming. TheOffice national dubois(ONAB) hasorganized reforestation programmes, butthe
approximately 3,000 hectares ofnewplanting eachyeardonotmake upfortheannual destruction,
estimated at100,000 hectares.WT/TPR/S/27 Trade Policy Review
Page 60
41. Halftheconstructional timber consumed inBenin isimported, mainly from Nigeria, Togo
andGhana. There isabanonexports ofwood intherough which mustbesoldtothewood processing
plants operated byONAB ortoprivate sawmills.
(3) Energy andmining sectors
42. Theenergy andmining sectors eachrepresent lessthan1percentofGDP. Imports meetabout
90percentofthedemand forelectrical energy, oilandnatural gas.Withaviewtoencouraging private,
particularly foreign investment, theGovernment hasundertaken areview ofthelegislation relating
tothemining andpetroleum sectors. Inthecontext oftheUruguay Round, Benin didnotinclude energy
ormining sector services initsSchedule ofCommitments under theGeneral Agreement onTrade in
Services (GATS).
(i) Crude oilandproducts thereof
(a) Exploration, exploitation andexports
43. Theonlyoilfield currently being exploited isthatonwhich theSémé offshore platform stands.
Discovered in1964, thisfieldonlybegan tobedeveloped in1982following theincrease inoilprices.
In1996 itproduced 1,700 barrels perday. Thedecline inproduction since 1993 ispartly connected
withthedepletion ofthefield (Table IV.3). Theplatform, apublic enterprise withadebtof
CFAF 29billion, isreported tobeintheprocess ofprivatization following upon foreign investment
relating toboththecurrent exploitation ofthefieldandtheexploration andfuture development rights.
Thesalewould bebased onproduction sharing: outofahypothetical production of10,000 barrels
perday,theState would take55percentplus12.5percentinroyalties.
Table IV.3
Production, import andconsumption ofenergy, 1990-1995
1990 1991 1992 1993 1994 1995a
Production ofcrude oil(millions ofbarrels) 1.3 1.4 0.9 1.1 0.9 0.7
Petroleum products (000metric tons)
Official imports 76.8 74.1 80.9 119.9 262.3 238.0
Unofficial imports 109.8 133.2 135.8 99.2 13.4 48.3
Estimated consumption 186.6 209.8 220.3 231.3 242.9 255.0
Electricity (gWh)
Production available 203.0 221.7 239.1 259.0 262.9 289.6
Including imports from Ghana 181.6 198.7 214.3 233.0 210.2 256.4
Consumption 173.2 188.5 210.6 257.6 225.0 250.2
aEstimate.
Source: Beninese Government.Republic ofBenin WT/TPR/S/27
Page 61
44. Thirteen contracts arereported tohavebeensigned withforeign ordomestic private enterprises
foroilandgasprospectinganddevelopmentactivitiesinBenin.15Estimatesofthetotalavailablereserves
varyconsiderably.16On1January 1995, proven reserves didnotexceed 27,000 barrels.17The
PetroleumCoderegulatesactivitiesassociatedwithoilandgasexploration,prospectinganddevelopment.
Thesector isexempt from VAT.
45. Allthecrude oilisexported since Benin doesnothavearefinery.
(b) Imports, storage anddistribution
46. Since 1974, thepetroleum products tradehasbeenorganized asaStatemonopoly withregulated
prices andwithimportation, transportation, distribution andstorage inthehands ofSONACOP. The
prices ofpetrol atthepump andthepriceofcertain petroleum products arefixedbydecree. Theprices
oflubricants, diesel andkerosene aredetermined bySONACOP. Inpractice, SONACOP 'smonopoly
ispartially undermined bytheinformal importation ofabout onefifthofdomestic petroleum product
consumption from Nigeria atconsiderably lower prices (Table IV.3).18
47. Since 1996, official salesofoilandgashavebeensubject toaninternal taxof20percent,
which represents abigincrease on1995(when theratewas1.4percent). Import duties stand at15per
cent, andtheState alsocollects revenue through SONACOP 'sdividends. In1994, these levies are
believed tohavetotalled CFAF 6.8billion, ormore than6percentofState revenue. Because of
increasedtaxes,between1994and1996SONACOP'snetprofitfellfromCFAF1.5billiontoCFAF124
million.
48. In1996, within thecontext ofitsthird structural adjustment programme, theGovernment
undertook toliberalize thefueltrade bytransferring some service stations toprivate companies. The
Petroleum Code wasapparently alsoamended topermit andencourage theimportation, distribution
andstorage ofpetroleum bytheprivate sector.
49. ByFebruary 1997, more than10foreign companies hadbeenapproved fortheimportation
anddistribution ofpetroleum products, butnonehadbegun operations. According totheauthorities,
theseprivate companies saytheywantanincrease intheofficial pricebefore investing. Anysubstantial
pricerisewould immediately increase theshare ofinformal imports attheexpense ofSONACOP and
anyothercompanyoperatinginthesector,andtheGovernmentisnotcurrentlyconsideringthepossibility
ofestablishing ceiling prices instead offixed prices.19
15LaLettre Afrique -Expansion, 6January 1997.
16According toarecent study carried outbyBeninese andforeign experts, there arereserves ofmore than
5billion barrels ofoil,90billion cubic metres ofgasand200million barrels oflight oil.
17Sigam, C.(1996).
18According toSONACOP, halfofdomestic consumption isimported informally from Nigeria.
19In1997,followingapricehike,regularpetrolhasrisenfromCFAF170toCFAF175,superfromCFAF175
toCFAF 200, diesel from CFAF 135toCFAF 175, andpetroleum from CFAF 100toCFAF 125.WT/TPR/S/27 Trade Policy Review
Page 62
(ii) Electricity
50. Thedemand forelectricity, 246gigawatt hours (GWh) in1995 andincreasing by9percent
ayear, islargely metbyimports, the12thermal power stations onBenin territory generating only
33GWh.20Generation anddistribution aretheresponsibility ofastateenterprise, Société béninoise
d'eauetd'électricité. Thelatterpurchases itselectricity fromanother Statecompany (established jointly
byBenin andTogo), Communauté électrique duBénin, which imports itmainly from Ghana and
Côted'Ivoire (Table IV.3). About 20percentofthepopulation hasaccess toelectricity.
51. Theprice ofimported electricity, onwhich thecompetitiveness ofBenin 'sindustries partly
depends, ishigher thanintheneighbouring countries (three times higher thaninNigeria), which to
some extent reflects thepresent lackofalternative sources ofsupply. Therateforlow-voltage electricity
varies from CFAF 56toCFAF 87perkWh, while thatformedium-voltage electricity varies from
CFAF 45toCFAF 73perkWh, plusafixed charge.
52. There areseveral projects under waytoincrease thesupply ofelectricity anddiversify the
sources ofsupply. Adamwithacapacity of40megawatts (MW), oranaverage annual output of
1,599 Wh,istobebuiltatAdjarralla foratotalcostofCFAF 124billion. Thisproject willbecarried
outunder aBOOT (Build, Operate, OwnandTransfer) typecontract. TheGovernment isalsoplanning
toconnect theBenin gridwiththeNigerian gridandtodevelop theconnection withtheTogo grid.
Atthesametime, apolicy ofsolarelectrification wasintroduced in1993andissupposed tobeextended
totheentire country afterapilotexperiment. Itisintended tobring solar power to36villages, but
by1997 onlyfourvillages hadbeenfullyequipped. Twoprivate companies share therural solar
electrification market between them.21
53. Thepower gridisrundown andstands inneedofconsiderable investment toreduce technical
losses. Thenecessary investment, financed largely bymultilateral institutions, should remain under
State control, since private investment inthesector isnotauthorized.
(iii) Natural gas
54. Theauthorities arecounting ontherecent discovery ofagasfield toreduce Benin 'senergy
dependency andsignificantly increase electricity generation. Agasturbine power station withacapacity
of120MWisplanned forSémé Kraké, alsoonthebasis ofaBOOT-type contract (seeabove).
SONACOP isresponsible forbutane gasimports and,inprinciple, establishes theprice ofgasona
costbasis.
20Onegigawatt-hour isequal toonemillion kilowatt-hours.
21ENERDAS (Société Energie DAHITO Systems) andSATT-Bénin.Republic ofBenin WT/TPR/S/27
Page 63
(iv) Other mineral products
55. Inaddition tooilandgas(seeabove), Benin 'sprincipal mineral resources aregold, building
materials (limestone, marble, clay, kaolin, ornamental stone) andiron.22However, most ofthese
resources arenotbeing exploited.23Recognizing thatprivate investment isalmost impossible under
thepresent legislation, theGovernment hasprepared anewMining Code, which Parliament isexpected
toapprove before theendof1997, withaviewtoattracting private investment inthesector.
56. ThedraftCode provides foraprospecting licence, issued bytheDirector ofMines, valid for
three years andrenewable three times fortwo-year periods. Exploration permits, issued byorder of
theMinister responsible formines, willbevalidforthreeyears andrenewable twice. Machinery and
equipment imported inconnection withanexploration permit willqualify fortemporary admission.
Anexploitation permit willbeautomatically granted, bydecree adopted intheCouncil ofMinisters,
totheholder ofanexploration permit whohasfurnished evidence oftheexistence ofadeposit within
theareadefined byhispermit. Itwillbevalidfor20years andrenewable twice forten-year periods.
TheState willhavea10percentinterest intheequity capital ofthedevelopment company without
having tomake afinancial contribution. Anadvalorem royalty, ataratestilltobedetermined, will
bepayable onthevalue oftheeffective output.
(4) Manufacturing sector
57. Themanufacturing sector andcrafttrades account forabout 8percentofGDP. Large-scale
public investment programmes, valued atmore thanCFAF 300billion during theperiod 1979-1990,
haddisappointingeconomicresults,leavingthecountryheavilyindebtedandwithoutagenuineindustrial
fabric. Apart fromagri-food products (see(2)above), theindustries thusestablished produce petroleum,
textiles, basic chemicals andcement.
58. Inaspeech made inParisinDecember 1996, thePrime Minister saidthatBenin 'snewindustrial
policy wastoencourage private investment, domestic andespecially foreign; thesectors viewed as
promising include, according tothePrime Minister, foodcropproducts, other agricultural products,
localmedicinal plants, essential oils,dyestuffs andpaints, soapandcosmetics.24
(i) Textiles andclothing
59. Downstream from thecotton ginning mills (seeabove), Benin hasaspinning andweaving
complex (COTEB), anunbleached cloth manufacturing unit(SITEX) andaprinted fabric factory
(SOBETEX). Cotton ginned locally bySONACOP isusedforspinning, butCOTEB isauthorized
toobtain supplies from private ginning mills atfreely negotiated prices.
60. COTEB andSITEX, which arescheduled forprivatization, arecontrolled bytheState. In
thecontext ofthecomplete privatization ofSOBETEX, 20percentoftheshares havebeenreserved
fordomestic investors. Thecompetition appears tocome mainly fromChinese fabrics, which before
devaluation costbarely halfasmuch asthecomparable Beninese products. Thus, itwasonlyafter
22Office béninois derecherches géologiques etminières (1997).
23In1997, eight prospecting licences were issued.
24LaLettre Afrique -Expansion, 6January 1997.WT/TPR/S/27 Trade Policy Review
Page 64
1993 thattheBeninese factories, and,inparticular SOBETEX were abletowinbackashare ofthe
domestic andexport markets.
61. There isaverybigtradeintextiles andclothing, inparticular because oftheimports oftextiles
andwornclothing re-exported toNigeria (Table IV.4). Astheimportation oftheseproducts intoNigeria
isprohibited, mostofthere-exportation isinformal. Thisactivity, important asitisinterms ofjobs
andearnings, could disappear rapidly ifNigeria liberalized imports, asinthecaseofrice(see(2)(i)(b)
above). Benin isnotaparticipant intheMulti-Fibre Arrangement (MFA) anditsexports arenotsubject
toanyrestriction under theAgreement onTextiles andClothing. Apart fromtherestrictions maintained
byNigeria, theauthorities havenoted thatithasbecome impossible toexport toCôted'Ivoire because
ofchanges inthatcountry 'simport trade regulations in1996.
Table IV.4
Trade intextiles andnewandusedclothing, 1992-1996
(CFAF billion unless otherwise indicated)
1992 1993 1994 1995 1996
Imports 26 31 35 43 43
(percentage oftotalimports) 17% 19% 15% 13% 19%
Including:
Products re-exported toNigeria 19 16 13 16 ...
Exports oflocal products 2.2 2.4 3.7 2.3 2.3
(percentage oftotalexports) 9.6% 4.7% 4.1% 2.6% 2.1%
...Notavailable.
Source: Beninese Government.
62. Import duties arehighest (15-20 percent) forgoods thatcompete withlocalproduction and
lowest (0-5percent) forproducts usedasinputs. Thetextile industry alsobenefits from protection
inasmuch asitsprincipal inputs, mainly fuelanddyestuffs, areexempt fromimport duty. There are
lowduties oncotton fabrics which areeither usedasinputs bytheclothing industry orre-exported
informally toNigeria.
(ii) Other products
63. Benin hasthree industries producing soap(SONICOG, see(2)above), oxygen andacetylene
respectively. Maximum customs duties areimposed onmost products thatcompete withdomestic
production (16-21 percent, including PCS). However, most chemicals usedasinputs bythelocal
industry areexempt fromimport duties. Re-exports areimportant andmake useofthetransit procedure,
informal re-exports being insignificant forthistypeofproduct.
64. During the70s,Benin acquired three stateenterprises which were given responsibility for
producing anddistributing cement. Local cement consumption wasabout 370,000 tonsin1992. Despite
thebanontheimportation ofportland cement, these enterprises havereported heavy losses. The
devaluation ofJanuary 1994appears tohaveledtoarecovery inproduction andsales. InMay1997,
thebanoncement imports waslifted.
65. In1991, twocompanies werepurchased, onebyaNorwegian andonebyaFrench enterprise.
Inbothcases, theState reserved 20-25 percentoftheshares fornationals and5percentforthe
personnel. Theprivatization ofthethird enterprise (Société desciments d'Onigbolo) depends upon
anagreement between Benin which holds 51percentoftheequity andNigeria which holds 43perRepublic ofBenin WT/TPR/S/27
Page 65
cent. Theprices ofthefinished products manufactured bythethree enterprises areapproved bythe
State.
66. Thetariffequivalentofallthetrademeasuresintroducedinthissector,measuredasthedifference
between domestic cement prices andunitimport prices, hasbeenestimated atover300percentfor
1995.25Some havesuggested thattheopening ofthefrontiers could leadtoafallintheselling price
andtheabolition ofprice controls, which, inprinciple, areintended toguarantee anaffordable price
everywhere inthecountry.26
(5) Services
67. TheBeninese economy istoalarge extent aservice economy, inwhich international trade
preponderates (Chart IV.1). Some services havebeenbound under theGATS.27Benin hasundertaken
tokeepthese activities accessible tocompetition fromenterprises originating inother Members ofthe
WTO. Forexample, initsSchedule ofSpecific Commitments under theGATS ithasauthorized a
foreign commercial presence formost tourism services (Table IV.5).
25World Bank (1996a).
26Société françaisedeconseil endéveloppement (1994).
27General Agreement onTrade inServices, Benin -Schedule ofSpecific Commitments, 15April 1994.WT/TPR/S/27 Trade Policy Review
Page 66
Table IV.5
Schedule ofSpecific Commitments under theGeneral Agreement onTrade inServices
Limitations onmarket access
Services and
modes ofsupplyCross-border supply Consumption abroad Commercial presence Presence ofnatural persons
BUSINESS
SERVICESConference centres (CPC 87909):
None None None Unbound, except formeasures
affecting theentry andtemporary
stayofnatural persons -whoare
employees ofthecompany and
transferred toacompany
incorporated inBenin belonging
to,controlled byorasubsidiary
oftheformer -inthefollowing
categories:
-Directors;
-senior executives;
-specialists whopossess
knowledge thatisessential to
theprovision oftheservice.
FINANCIAL
SERVICESAcceptance ofdeposits andother repayable funds from thepublic (CPC 81115-81119):
None None Toengage inbanking
activities itisnecessary to
havetheapproval ofthe
Ministry ofFinance, Law
No.90-018 of
27July1990 onthe
regulation ofbanking.
Banks must beestablished
intheform ofpublic
limited companies with
fixed share capital having
theirprincipal place of
business intheRepublic
ofBenin, orbyspecial
authorization ofthe
Minister ofFinance after
consulting theBanking
Commission, intheform
ofcooperative ormutual
societies withvariable
share capital.Inaccordance withBenin Labour
Law. Inaddition, aperson may
notadminister ormanage abank
orfinancial establishment, oran
agency thereof, ifhedoesnot
possess Benin nationality, unless
theagreement forthe
establishment ofthebank
provides forassimilation to
Benin nationals.
Lending ofalltypes (CPC 8113):
Residents maytakeoutloans abroad afterfirst
obtaining authorization from theMinister of
Finance inconformity withtheexchange
control regulations forloans ofover
CFAF 50million.Unbound Seeconference centres
Allpayment andmoney transmission services (CPC 81339):
Unbound Unbound Inaddition toapproval as
abank, approval asan
intermediary isalso
required.Seeconference centres.
(Table IV.5 cont'd)Republic ofBenin WT/TPR/S/27
Page 67
Services and
modes ofsupplyCross-border supply Consumption abroad Commercial presence Presence ofnatural persons
TOURISM AND
TRAVEL
RELATED
SERVICESRestaurants
Unbound None None Seeconference centres.
Other hotels andrestaurants services (CPC 641-643)
None Themanager must
havehotel
management
qualifications.None Seeconference centres.
TRANSPORT
SERVICESMaritime passenger transportation, rental ofvessels withcrew (CPC 7211/7213):
None None None Seeconference centres.
Freight transportation (CPC 7212):
20percentofthe
volume ofmaritime
traffic open to
competition ofall
shipping companies.None None Seeconference centres.
Cargo-handling services, storage andwarehouse services (CPC 741,742):
None None State monopoly (Decree
No.89-336 of
29/08/89).Seeconference centres.
Customs brokerage services, container stuffing anddestuffing services transport agencies
andforwarding agencies (CPC 741,749):
None None None Seeconference centres
Source: WTO document GATS/SC/11, 15April 1994.
68. TheGovernment hasalsonotified aListofArticle IIExemptions indicating thesectors which
formthesubject ofanexception tothemost-favoured-nation principle. However, there isstillawide
range ofservice sectors inwhich there hasbeennoliberalization. Inparticular, theGovernment has
notparticipated inthenegotiations ontelecommunications orfinancial services heldbytheWTO within
thecontext oftheGATS. Participation would enable theauthorities toengage inageneral review
oftheconsistency ofthelaws, decrees anddecisions inforce intheprincipal service industries and
oftheextent towhich theyserve theGovernment 'scurrent objectives, namely therevitalization of
theeconomy through thepromotion oftheprivate sector andinternational trade.
(i) Transport services
69. Transport activities represent onlyabout 7percentofGDP (1994), butnolessthan20per
centofemployment. Airandrailtransport services areprovided bymonopolies atregulated prices
anddirect investment isrestricted. Competition inmaritime transport hasbeenencouraged bythe
absence ofanational merchant fleet, withoperators notbeing obliged tousevessels flying thenational
flag.WT/TPR/S/27 Trade Policy Review
Page 68
(a) Portservices
70. More than90percentofforeign merchandise trade(formal) iscarried bysea.Theautonomous
portofCotonou isplaying aleading roleinthedevelopment ofthecountry. In1996, onaverage,
100vessels permonth called atCotonou. Annual traffic hasbeenincreasing continuously since 1989
andin1996 exceeded 2million tons(Table IV.6).28Between 20and25percentofporttraffic isfor
theaccount ofother countries, principally Niger (250,000 tons). Thetraffic forNigeria increased
ten-fold between 1990and1996toreach 84,000 tons. In1996, therevenue collected bytheautonomous
portofCotonou amounted to1.1billion francs, or0.7percentofmerchandise imports.
Table IV.6
Traffic intheautonomous portofCotonou
Description 1995 1996 Percentage change
I.Number ofvessels 1,085 1,193 10
ofwhich: merchant vessels 685 772 13
II.Imports (000tons) 1,597 1,670 5
ofwhich: Hydrocarbons 262 289 11
Clinker, gypsum 418 392 -6
Other construction materials 47 44 -8
Cereals andsimilar 213 239 12
Foodstuffs 191 189 -1
Lubricants andbitumen 4 6 48
Fertilizers andinsecticides 70 74 5
Vehicles andspare parts 59 91 53
III. Exports (000tons) 313 382 22
including: Cotton seed 89 147 65
Cotton 91 123 35
IV.Total goods (000tons) 1,910 2,052 8
Source: Autonomous portofCotonou.
71. Theslowness oftheportservices hasbeenidentified asoneoftheprincipal obstacles forBenin
enterprises seeking toimprove productivity. Handling procedures arereported tobeonaverage four
times longer thanthose inthecompeting portofLomé inTogo. Thetransit timeforcontainers is
10days, ortwice theregional average; theefficiency ofcotton balehandling isreportedly thelowest
intheregion.29These porthandling, warehousing andstorage services areaStatemonopoly operated
bytheSociété béninoise demanutention portuaire (SOBEMAP) which manages theportequipment
andharbour works. Prices arefixed bytheGovernment. In1992, thevarious taxes, charges and
other levies imposed bySOBEMAP amounted toCFAF 1.2billion or0.8percentofimport value.
72. Theautonomous portofCotonou, which isanswerable totheMinistry ofFinance, isresponsible
forcoordinating portactivities andformulating andapplying aportmanagement andpromotion policy,
including thereform orelimination ofinefficient structures.30Inpractice, however, itwould seem
28Commercial traffic (excluding trawlers, warships andsupply ships serving theSémé oilplatform) amounts
toabout 75vessels permonth, oranincrease of35percenton1995.
29UNCTAD (1996).
30Theimprovement ofportstructures isthesubject ofanongoing project withtheInternational Development
Association (IDA).Republic ofBenin WT/TPR/S/27
Page 69
thattheautonomous portofCotonou hasdifficulty asserting itsauthority overother Stateentities, in
particular SOBEMAP.
73. Among theauxiliary maritime transport services, competition (including foreign) isauthorized
inconnection withtheactivities ofcustoms brokers who,however, mustbeapproved, container stuffing
anddestuffing, andtransport andforwarding agencies. These activities formthesubject ofbindings
byBenin under theGATS (Table IV.5).31Thegreat majority ofsea-land forwarding operations are
carried outbysixoperators, themselves subsidiaries oftwomultinational groups.
(b) Maritime transport
74. Seafreight represents onaverage 20percentofthef.o.b. costofimports and10percentof
thecostofexports. Since July1974, theCompagnie béninoise denavigation maritime (COBENAM)
hasbeenatwo-State company. Thisisthenational shipping linewithexclusive rights toBenin 's
maritime traffic.32Having solditslastshipin1990, COBENAM isrenting allorpartofthecargo
space ofvessels belonging to20orsoforeign shipping linesinorder toprovide aregular service on
certain routes between Benin, Europe andtheFarEast. Itcontrols about 8percentoftheforeign
merchandise trade, mainly between Benin andEurope.33Among thesixshipagencies offering regular
services, twocompanies account for58percentofthemerchandise traffic.34Itwould seem thatnot
having anational fleethasmade itpossible toseekoutthelowest costsbyexploiting thecompetition,
since there isasurplus ofmaritime transport services inBenin.
75. Anoffshoot ofthemaritime conference tradition, theConseil national deschargeurs duBénin
(CNCB) wassetuptorepresent theinterests ofdomestic importers andexporters. Itadministers traffic
rights andnegotiates thefreight ratesforeachimport orexport operation withtheshipping companies.
Under theUNCTAD Code, ithastherighttodesignate avessel other thanthatchosen bytheeconomic
operator ifitexceeds thequota, inprinciple inorder tosupport thenational fleet. CNCB 'sresources
come fromcontributions andlevies oninternational maritime transport prices.35Withthedislocation
ofthelinerconferences, thefunctions ofthisinstitution arecurrently being reviewed bytheMinisterial
Conference ofWest African States andtheMaritime Transport Centre.
76. During theUruguay Round negotiations, Benin included certain forms ofmaritime transport
initsSchedule ofSpecific Commitments (Table IV.5), withcertain reservations asregards the
most-favoured-nationclausewhichessentiallyreflecttheprovisionsoftheUNCTADCode.Inparticular,
theBeninese Government notified, initsListofArticle IIExemptions, "existing orfuture laws, decrees
31General Agreement onTrade inServices, Benin -Schedule ofSpecific Commitments, 15April 1994.
32These rights aredefined inaccordance withtheUnited Nations Convention onaCode ofConduct forLiner
Conferences (UNCTAD Code) which provides forthetraffic tobeshared among shipowners intheratioof40per
centforthenational fleetand40percentforthenational fleets oftrading partner countries, withtheremaining
20percentopen tounrestricted competition.
33UNCTAD (1996).
34TheseareSDV(Bollorégroup)andSOBEM(SAGAgroup).Theotherprivateshippinglinesare:MAERSK
LINE (12percent) andTRANSCO.
35CNCB 'sresources derive fromcontributions made byimporters andexporters attherateof2perthousand
ofthecustoms value ofthegoods andfrom commissions paidbytheshipping lines whose vessels callatthe
portofCotonou attherateof6French francs (FF) pertonne forimports and4French francs forexports.WT/TPR/S/27 Trade Policy Review
Page 70
anddecisions, based onbilateral ormultilateral agreements which grant cabotage andlinertraderights
totrading partners" andapply inprinciple toallforms ofmaritime transport, including bulktraffic
andthetransport ofchilled fruit.
(c) Inland transport
77. Thesupplyofrailwayservicesislimitedto438km.ofmetrictracklinkingCotonouandParakou
inthenorth ofthecountry. Thecoastal lineshavebeentaken outofservice since theywere not
profitable. Thetwo-State Organisation commune Bénin-Niger (OCBN) wassetupin1959toadminister
andmanage therailway which hasacapacity ofabout 500,000 tonsperyear. Between 1987and1990,
passenger traffic declined atabout therateof14percentperyear. In1993, astartwasmade on
restructuring thecompany inorder toreduce costs, improve thestandard ofservice andinvest innew
equipment soastomeet thecompetition from roadtransport operators wholoadupintheportof
Cotonou, despite the1960decree prohibiting competition withOCBN forthecarriage ofgoods between
Cotonou andNiger.36
78. TheGovernment 'smain objectives inthesector aretomake good the"shortage ofrailway
equipment" andtomake theservices more competitive, inparticular byimproving railcommunications
withthenewportzones. Although, inthelonger term, theauthorities intend toabolish theexisting
State monopoly, private investment inthesector isnotcurrently possible.
79. Road transport between Benin, Burkina Faso, Côted'Ivoire, Niger andTogo isregulated by
aconvention dating from1970. Within ECOWAS, since1982therehavebeentwoconventions defining
theconditions ofinter-state roadtransport, andinparticular goods transport.
80. Morethan200transportcompanies(includingindividualroadtransportoperators)areregistered
withtheInland Transport Directorate andtothesemustbeadded theinformal hauliers. Public transport
andtransit activities arereserved forBeninese nationals orcompanies, foreigners whoweretransport
operators atthetimetheregulations inforcewerepublished andforeigners whoarenationals ofcountries
which grant reciprocity toBeninese citizens.
81. Theauthorities notethatnumerous roadblocks (official andunofficial) andother"harassments"
addtothecostofBeninese products, particularly exports. Forexample, themore than20control
points along theroadbetween Cotonou andthefrontier withNiger areestimated toadd20to30per
centtotransport costs, withacorresponding reduction inthecompetitiveness ofBeninese products.
Itwasplanned tosetuparoadobservation post, managed jointly bytheGovernment andtheprivate
sector, toeliminate these roadblocks.
(d) Airtransport
82. Airtraffic isrelatively undeveloped, withabout 4,000 commercial aircraft movements peryear,
orlessthanatenthofthose recorded inCôted'Ivoire orSenegal. There arefourcommercial freight
flights perweek, withanaverage individual capacity of20tons. There arenostorage facilities at
theairport.37In1994, airtransport wasusedforonly3and7percentofexport andimport value
respectively.
36UNCTAD (1994).
37UNCTAD (1996).Republic ofBenin WT/TPR/S/27
Page 71
83. Authorization toengage inanairtransport activity isgranted byministerial decree, afterthe
Civil Aviation Directorate hasgiven itsopinion onthetechnical andfinancial guarantees andevidence
ofprobity offered bythecompany expressing interest andthe"desirability ofopening aline", onthe
basis oftheintensity oftraffic onthatline. AnewCivil Aviation Code isawaiting ratification by
theNational Assembly. According totheauthorities, theBenin market istoosmall toallow alarge
number ofairtransport operators toexploit thecountry 'straffic rights.
84. Themultinational AirAfrique isthecompany designated toexploit theinternational routes.
Asinmost other countries ofthesubregion38,airline transport isorganized asduopolies between
AirAfrique andtheforeign airlines ofthecountries served. Benin hassigned 22international air
agreements, including fourwithitsneighbours (Burkina Faso, Niger, Nigeria andTogo). Atpresent,
there isoneregular charter flight toBenin. Charter flights areauthorized forpassenger transport,
butanynewcharter-type proposal mustbesubmitted firsttoAirAfrique, which mayprovide allor
partofthetransport services attheprice proposed.39
85. In1997, aircargo forEurope continues tobecarried exclusively byAirAfrique andAirFrance
under anairagreement between Benin andFrance based ontheprinciple ofsingle designation.40Air
cargo costs, which forsome products represent nearly halftheselling price, arereported tobetwice
ashighbetween Benin andFrance asbetween Accra andLondon. Thiscould reflect theexistence
ofairtransport monopolies andpenalizes Benin 'sexporters ascompared withtheirforeign competitors.
In1994, astudy ofthecompetitiveness oftheBeninese economy recommended thatcharter cargoes
beauthorized asquickly aspossible inorder todevelop exports, particularly ofperishables.41
(ii) Financial services
(a) Banking services
86. Thebanking sector wasrestructured atthebeginning ofthe90s,following aserious crisis in
thefinancial system involving theliquidation oftheState banks which uptothenhadbeentheonly
source ofbanking services. Fiveprivate commercial banks havesince beenauthorized tosetupand
nowcontrol 90percentofformal-sector savings.42These banks havefewlong-term savings instruments
suitable forfinancing investment. Theguarantee andlegal systems areunreliable, which doesnot
encourage them tomanage theirriskseffectively, especially inthecaseofsmall- andmedium-sized
enterprises. Consequently, lending remains atparticularly lowlevels, which isrestricting the
opportunitiesforfinancinginvestmentinBenin.Theothersideofthecoinisanaccumulationofliquidity
38WTO (1995).
39Protocol concerning charter regulations intheAirAfrique multinational zone.
40Under thissystem, afirmwishing toengage insuchtransport must beappointed bytheFrench aeronautical
authorities inlieuofAirFrance. Itisalsopossible fortheFrench andBeninese aeronautical authorities tohold
consultations onthematter andtooptformultiple designation inthefuture. Another airline could thenoperate
side-by-side withAirFrance.
41Société françaisedeconseil endéveloppement (1994), Etude surlacompétitivité del'économie duBénin,
Final report.
42Bank ofAfrica Benin (BOA), Ecobank Benin, Financial Bank Benin, Banque internationale duBénin and
Continental Bank, ofwhich thelastisnowreported tohave been bought byFinancial Bank Benin.WT/TPR/S/27 Trade Policy Review
Page 72
inthebanks, whose demand deposits arereported toexceed CFAF 150billion. In1996, value-added
inthebanking sector represented 1.8percentofGDP.
87. Banking activity issubject totheapproval oftheMinister ofFinance, withtheconsent ofthe
WAEMU Banking Commission.43Under thelegislation inforce, onlycitizens ofaWAEMU member
country mayadminister ormanage abank, afinancial institution oroneoftheirbranches inBenin,
unless thebank hasbeendomesticated under anestablishment agreement.44These provisions have
beenbound under theGATS (Table IV.5). Theactivities ofthebanks andfinance companies areexempt
fromVAT andsubject toafinancial activities taxattherateof5percentofturnover generated inside
Benin.
88. Thebanks established inBenin mustobtain theauthorization oftheMinister ofFinance before
taking outloans or,more generally, investing outside thefranc zone. Inpractice, thisauthorization
israrely granted. These restrictions onthefreedom ofmovement ofcapital havealsobeennotified
under theGATS (Table IV.5).
(b) Insurance services
89. Theinsurance sector isrelatively underdeveloped (about 0.2percentofGDP), partly because
ofthemonopoly conferred since1974ontheSociété nationale d'assurance etderéassurance (SONAR).
TheGovernment announced theopening oftheinsurance sector tocompetition in1992, andin1994
andthen1996twonewlifeinsurance companies wereapproved bytheMinistry ofFinance.45However,
SONAR stillhasamonopoly onthesupply ofnon-life insurance services.
90. Importers established inBenin must insure their imports withSONAR. According toa
December 1996 report bytheNational Economic Conference, thisobligation doubles theinsurance
costs, since mostsupply contracts areonac.i.f.basis. Other importers apparently takeoutinsurance
abroad inorder tobesureofbeing indemnified ifproblems arise.46
91. Benin hassigned theTreaty Establishing anIntra-African Insurance Market Conference Code
(CIMA Code), theonlyinsurance legislation inthecountries ofthefranc zone.47TheCode entered
intoforce on15February 1995. Thislegislation prohibits theestablishment inBenin ofbranches and
subsidiaries offoreign companies; onlycompanies established under domestic law,whatever theorigin
ofthecapital, andapproved bytheMinistry ofFinance afterconsultation withtheRegional Insurance
Control Commission inLibreville areauthorized tooperate. TheCIMA Code requires thatlifeand
non-life (fire, accident, miscellaneous andtechnical risks) insurance activities beseparated.
43LawNo.90-018 of27July1990.
44UNCTAD (1996).
45These areUnion béninoise d'assurance UBA-VIE (foreign majority interest) which hasbought SONAR 's
lifeportfolio, andAssurance etréassurance duGolfe deGuinée (Beninese majority interest).
46UNCTAD (1996).
47Thecontracting parties totheTreaty areBenin, Burkina Faso, Cameroon, Chad, Central African Republic,
Comoros, Côte d'Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal andTogo.Republic ofBenin WT/TPR/S/27
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92. Theinsurance companies areexempt fromVAT andsubject toinsurance policy taxattherate
of10percentofpremiums forlifeinsurance, 30percentforfireinsurance, 0.25percentforexport
credit insurance and7percentforother insurance premiums.
(c) Other financial services
93. Apart from thebanks andinsurance companies, thefinancial sector consists oftheCaisse
nationale d'épargne, theCentre descomptes chèques postaux, aleasing company (EQUIPBAIL), the
National Lottery, arural savings andloans cooperative andaveryactive informal sector.48The
Government hassaidthatitintends topromote themutual andcooperative financial institutions inorder,
among other things, tocounteract theeffects ofthedisappearance ofthebanks andestablishments
specializing indevelopment financing. TheFédération descaisses d'épargne etdecrédit agricole
mutuel (FECECAM) hasbeensetuptodevelop ruralcredit. After thetontines system, itistheprincipal
decentralized financial institution with62branches alloverBenin andabout 150,000 customers.
94. Informal credit plays animportant roleinBenin andmore than80percentofthepopulation
make useofit.Among theprincipal informal credit systems, thetontine isagroup ofpeople who
regularly payagiven amount intoacommon fund, thebalance inwhich ispaidouttoeachofthe
members inturn. Thisenables theparticipants toreceive relatively largesumsofmoney without having
tosaveforlongperiods. Theitinerant bankers (or"tontiniers collecteurs" )generally travel about
collecting deposits ormaking loans andcatertoaclientele which doesnothaveaccess tothebanks.
They takeoffacommission fortheirservices which canamount to3percentpermonth.49
(iii) Tourism, hotel andrestaurant services
95. Benin hasnumerous tourist attractions, fewofwhich arecurrently being exploited. Since 1990,
thenumber oftourists hasgrown sharply, reaching 140,000 in1993 before falling backto117,000
in1994.50Thisfallinthenumber ofarrivals observed in1994 hasbeenattributed bytheauthorities
topolitical turbulence intheneighbouring countries. There areabout 160hotels with2,600 rooms.
Inaddition thereare24travel agencies. Theemployment (direct andindirect) generated bythesector
(including restaurants) represents more than7,000 jobsandbrings inCFAF 700million fortheState
(taxes collected in1994), i.e.about 1percentofbudget revenue.
96. InitsSchedule ofSpecific Commitments under theGATS, Benin undertook tomaintain hotel
industry andcatering services opentoforeign commercial presence. Theentry andtemporary stay
ofdirectors, senior executives andspecialists transferred toacompany establishing itselfinthesesectors
inBenin werealsobound. Travel agencies established outside Benin (cross-border supply) mustwork
through anagency (Benin orforeign) established inthecountry. Thegranting ofthelicence required
toopenanagency isbased ontheprobity andprofessional criteria laiddown intheregulations inforce
butisnot,according totheauthorities, subject tonationality conditions.
48TheCaisse nationale d'épargne andtheCentre descomptes chèques postaux areservices financed bythe
Office despostes etdestélécommunications (OPT), which isapublic entity. TheNational Lottery ofBenin
isaState company.
49Adéchoubou, M.(1996).
50Thelarge number ofinternational visitors arriving atBenin 'sfrontiers -542,000 in1994 -reflects the
importance oftrade forthecountry rather thantheimportance oftourism. Infact, more thanthree quarters
ofvisitors come toBenin onlyforthedayorarecruise passengers orcrew members.WT/TPR/S/27 Trade Policy Review
Page 74
97. There areseveral factors limiting thedevelopment oftourism. Theappreciation inrealeffective
terms oftheCFAfranc created obstacles totourist development bymaking thecountry more expensive
thanothers outside thefranc zone. Inthisrespect, devaluation hashadabeneficial effect. However,
because oftheparity withtheFrench franc, theauthorities mustconstantly endeavour tomaintain the
prices oftourist services atlevels thatenable Benin tocompete withother comparable destinations
outside thezone.
98. Inthepast,theInvestment Code (stillinforce) banned direct investment inthehotel sector,
which waswholly owned bytheState. A1992 lawlimits privatization inthesector (Chapter II).
However, direct investment hasbeenbound byBenin under theGATS (Table IV.5).
99. According toastudy ofthesector, "themonopoly exercised bythefewairlines which serve
Benin andtheprohibitively highfares theycharge areholding backthedevelopment oftourism".51
Theparticipants intheNational Economic Conference noted thehighelectricity costsandrecommended
thatthehotel andtourism industry becharged forelectricity attheindustrial rate. TheConference
alsostressed thefailure topromote Benin asatourist destination andthepoor quality ofthe
accommodation anddomestic transport.
(iv) Telecommunications andbroadcasting
100. Thetelecommunications sector represents about 1.6percentofGDP. Thesupply ofservices
isaStatemonopoly exercised bytheOffice despostes ettélécommunications (OPT), anindustrial and
commercial public establishment. Theturnover oftheOPT(about CFAF 8billion in1992) declined
inrealterms between 1990 and1994. Theauthorities were notabletoprovide information onthe
turnover, value-added, andprofits andlosses forthelastfiveyears oronanysubsidies received from
theState.
101. Thenational telephone network, withlessthan30,000 subscribers, corresponds more orless
totheaverage forSub-Saharan Africa interms oftelephone linesperinhabitant. Ontheother hand,
thedemand fornewlinesisgrowing twice asquickly astheaverage fortheSub-Saharan countries.
Thedensity ofthebasic network iscurrently insufficient tomeetthisdemand andheavy investment
willbeneeded todevelop boththebasicservices andthevalue-added services sectors. Projects estimated
atCFAF 25billion and95percentfinanced byforeign capital arereported tobeunder way.
102. Theauthorities areaware oftheneed toimprove theefficiency andreduce thecosts of
telecommunications services forBeninese enterprises. Forexample, 90faults peryearper100main
linesarerecorded, asagainst 24inTogo and8inSouth Africa; andthere are17main linesper
employee, ascompared withanaverage of25forSub-Saharan Africa.52Thetariffs arefixed bythe
Stateatrelatively highlevels (Table IV.7). However, there arenocurrent plans forprivatizing OPT
orexposing ittointernational competition. TheGovernment didnotparticipate inthenegotiations
ontelecommunications heldintheWorld Trade Organization within thecontext oftheGATS.
51UNCTAD (1994).
52International Telecommunications Union (1996).Republic ofBenin WT/TPR/S/27
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Table IV.7
Telephone charges incertain countries, 1994
(US$)
Residential Business Local call Monthly
subscription as
percentage of
percapita GDPInstallation Monthly
subscriptionInstallation Monthly
subscription
Benin 158.0 4.1 287.7 4.1 0.11 12.0
Côte
d'Ivoire48.3 12.3 148.3 12.3 0.20 21.1
Ghana 52.3 1.0 52.3 1.0 0.10 3.5
Nigeria 133.7 2.3 201.9 4.5 0.26 9.3
South Africa 74.8 10.5 74.8 10.9 0.06 4.5
Togo 192.7 2.6 192.7 2.6 0.09 9.4
Source: International Telecommunication Union.
103. Theauthorities werenotabletoprovide anexplanation oftheregulations inforce concerning
imports oftelecommunications equipment. Itwould seem thatdespite themonopoly granted toOPT,
most ofthisequipment isbeing imported inconnection withprojects which areexternally financed
andhence inlarge partsubject to"tiedaid"conditions, according towhich theequipment mustcome
from thecountry supplying thefinance.
104. Theprivate sector ismainly responsible fortheinstallation andmaintenance oftheequipment.
TheMinistry responsible fortelecommunications issues private installer 'spermit forcompany
telecommunication facilities. About 10installers were approved in1997. Lineterminals andother
equipment mustbeinspected andapproved byOPT. There seems tobealegalvacuum withrespect
totheimportation andpurchase ofequipment (forexample, telephones) directly bytheconsumer.
105. Acellular mobile telecommunications system hasbeeninoperation inBenin since 1995; it
ismanaged byOPTwhich istheexclusive operator. In1995, thesystem had1,050 subscribers. Cellular
communications offeranalternative tothefixed-link networks thanks tolower investment costs and
quicker installation.
106. Where television broadcasting isconcerned, there aresatellite paysystems inoperation. At
present, OPTisnotplanning toinstall acabled communications network providing bothtelevision
andtelecommunications services. Thecompany Canal +isbroadcasting bysatellite andcanbereceived
withindividualdirect-receptiondishes.Atelevisionstation(TV5)isbroadcastingbymeansofmicrowave
distribution systems (MDS) financed byCanada; thissystem isfavoured bytheconsumers since it
islessexpensive thanprivate parabolic antennas.53
107. According totheauthorities, Benin hasadirect linkwiththeInternet.
53Ibid.WT/TPR/S/27 Trade Policy Review
Page 76
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