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PRESS/TPRB/59
5September 1997
BENIN -ROLE ASTRADE HUB WOULD BESTRENGTHENED
BYGREATER PREDICTABILITY OFIMPORT DUTIES
AND LIBERALIZATION OFSERVICES
Benin isatrade centre andthuscommitted totheprinciple offreetrade. After discarding the
Marxist-Leninist model in1990, Benin hasprogressively liberalized itseconomy inrecent years,
according toanewreport bytheWTO Secretariat onBenin 'strade policies andpractices.
TheSecretariat 'sreport, together withareport prepared bytheGovernment ofBenin, will
serve asthebasisforthereview ofthecountry 'stradepolicies tobeheldon15and16September 1997.
TheSecretariat 'sreport notes thatwhile Benin 'strade legislation isliberal, itisnotapplied
transparently. Import duties, atanaverage of13percent, areamong thelowest inAfrica, but
administrative procedures attheborder arecomplex, slowandprone toirregularities. Benin grants
MFN treatment toimports fromallsources. Nevertheless, thereport highlights thatwhile import duties
onagricultural goods havebeenbound, thisisnottrueformost industrial products.
Newlegislation hasbeentabled tomake access toBenin 'smarket more reliable andattractive,
inparticular lawsoninvestment, government procurement andcompetition. Thereport alsonotes
thatoutside thelegislative framework theinformal sector accounts formuch ofeconomic activity in
Benin, which istherefore notreflected inthestatistics.
Cotton, Benin 'smain export, isexported toanumber ofcountries (chiefly Brazil, Morocco
andPortugal) andaccounts formore than3percentofworld exports. Thecotton sector provides
20percentofBenin 'sGDP andmore than90percentofitsexport earnings. TheGovernment has
amonopoly forthepurchase ofallcotton production, anditsgoalistodouble output bytheyear2000.
Agriculture asawhole represents more thanonethird ofBenin 'sGDP. Ingeneral, the
agricultural product processing sectors (oils, beverages, foods andtextiles), exposed tocompetition
fromimports, arerecording profits. Benin 'smainimports arealsoagricultural products (rice, cereals)
which aretoalarge extent re-exported toneighbouring countries.
97-3533 MOREPRESS/TPRB/59
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Thereport notes thatservices continue tobeprotected bypublic monopolies, exclusive trading
rights andimport prohibitions. Most service sectors (telecommunications, energy, non-life insurance
andairtransport) arerunbytheState, which hasalimited capacity forinvestment andadaptation to
newtechnologies.
Benin 'smain economic partner isNigeria. France isitsprincipal supplier. Classed among
theleastadvancedcountries,Beninreceivesnon-reciprocaltradepreferencesfromthedevelopedcountries
(Generalized System ofPreferences andLomé Convention). Benin isamember oftheWest African
Economic andMonetary Union (WAEMU), whose Treaty provides forthecreation, asfrom
January 1998, ofacustoms union withacommon external tariff. TheUnion includes several countries
whose tariffandnon-tariff protection isconsiderably higher thanthatofBenin. Benin isalsoamember
oftheEconomic Community ofWest African States (ECOWAS), which aimsatthefreemovement
ofgoods.
Inconclusion, thereport suggests thatBenin should bindallitsimport duties, which would
confirm theopenness ofitsmarket andprovide greater certainty fortraders andinvestors, andthat
itshould further openitsservice sectors toprivate investment. Exhaustive application oftheUruguay
Round Agreements would favour these changes.
Note toEditors
TheWTO Secretariat 'sreport, together withareport prepared byBenin willbediscussed by
theWTOTradePolicyReviewBody(TPRB)on15and16September1997.TheWTO'sTPRBconducts
acollective evaluation ofthefullrange oftrade policies practices ofeachWTO Member atregular
periodic intervals andmonitors significant trends anddevelopments which mayhaveanimpact onthe
global trading system. Thetworeports, together withareport oftheTPRB 'sdiscussion andofthe
Chairman 'ssumming-up, willbepublished induecourse asthecomplete Trade Policy Review ofBenin
andwillbeavailable from theWTO Secretariat, Centre William Rappard, 154ruedeLausanne,
1211 Geneva 21.
Thereports cover thedevelopment ofallaspects ofBenin 'stradepolicies, including domestic
lawsandregulations, theinstitutional framework, trade policies bymeasure andbysector. Since the
WTO cameintoforce, the"new areas" ofservices tradeandtrade-related aspects ofintellectual property
rights arealsocovered. Attached arethesummary observations fromtheSecretariat andGovernment
reports. Fullreports willbeavailable forjournalists from theWTO Secretariat onrequest.
Since December 1989, thefollowing reports have been completed: Argentina (1992),
Australia (1989 and1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992 and1996),
Cameroon (1995), Canada (1990, 1992, 1994 and1996), Chile (1991), Colombia (1990 and1996),
Costa Rica(1995), Côted'Ivoire (1995), Cyprus (1997), theCzech Republic (1996), theDominican
Republic (1996), Egypt (1992), ElSalvador (1996), theEuropean Communities (1991, 1993and1995),
Fiji(1997), Finland (1992), Ghana (1992), Hong Kong (1990 and1994), Hungary (1991),
Iceland (1994), India (1993), Indonesia (1991 and1994), Israel (1994), Japan (1990, 1992and1995),
Kenya (1993), Korea, Republic of(1992 and1996), Macau (1994), Malaysia (1993), Mauritius (1995),
Mexico (1993), Morocco (1989 and1996), NewZealand (1990 and1996), Nigeria (1991), Norway
(1991 and1996), Pakistan (1995), Paraguay (1997), Peru(1994), thePhilippines (1993), Poland (1993),
Romania (1992), Senegal (1994), Singapore (1992 and1996), Slovak Republic (1995), South Africa
(1993), SriLanka (1995), Sweden (1990 and1994), Switzerland (1991 and1996), Thailand (1991
and1995), Tunisia (1994), Turkey (1994), theUnited States (1989, 1992, 1994 and1996),
Uganda (1995), Uruguay (1992), Venezuela (1996), Zambia (1996) andZimbabwe (1994).
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TRADE POLICY REVIEW BODY
BENIN
Report bytheSecretariat
1. Inthecourseofthelast10years,Beninhasbrokendecisivelyawayfromthecentralizedplanned-
economy system which hadplaced serious obstacles inthewayoftrade andhasestablished alargely
openmarket economy. Thetransition hasbeengradual andtheeconomy continues tobeplagued by
problems inthehealth andeducation sectors which mustbesolved before economic growth cantake
off.Although thetrade legislation isliberal, thewayinwhich itisbeing administered seems tobe
arbitrary andlacking intransparency. Benin isparticularly exposed tochanges inthetrade polices
ofitsneighbours, notably Nigeria, anditsexport sector isdependent onasingle basic product, cotton.
(1) Economic andtrade flows
2. Despite apercapita income ofabout US$370, which places itamong thecountries thatare
leastadvanced, Benin isoneofAfrica 'sprincipal trade centres. After agriculture, which generates
more thanathird ofgross domestic product andthebulkofexport earnings, portservices and
commercial andtransport services form theprincipal sector ofactivity. Aconsiderable proportion
ofthecountry 'seconomic activities, including foreign trade, isconducted onaninformal basis, i.e.
outside thenational statistical system. Toaconsiderable extent, Benin 'strade andrelated activities
depend ondevelopments associated withthevarious import restrictions imposed byNigeria, which
remains itsprincipal economic partner. Other neighbouring countries, some ofwhich areland-locked,
usethePortofCotonou asanoutlet tothesea.
3. Confronted attheendofthe80swithaserious economic andfinancial crisis, characterized
among other things byasharp fallinpercapita income, in1990Benin abandoned theMarxist-Leninist
model inplace since 1974. Since then, thanks toseveral macroeconomic stabilization programmes,
ithasbeenabletore-establish theviability ofitspublic finances andbalance ofpayments, although
thelatter continues todepend onexternal grants. Thepublic enterprises, including thethree State
banks which wentbankrupt in1988, havebeenrestructured, privatized orwound up.TheState'sarrears
ofpayment, domestic andforeign, areintheprocess ofbeing absorbed. Together withtheother
members ofthefranc zone, inJanuary 1994, Benin devalued itsnational currency fromCFAF 50to
itspresent levelofCFAF 100totheFrench franc. Theenterprises which benefited most from this
devaluation were those producing forexport using inputs purchased locally. Economic growth has
stabilized atalevelslightly above therateofpopulation increase, butremains atthemercy offluctuations
inworld cotton prices.
4. Theavailable statistics indicate thatexports aregeographically diversified, which reflects the
strong demand forBeninese cotton onworld markets. Quality ginned cotton exports wereevaluated
at$230 million in1996, ormore than3percentofworld exports. Thebiggest customer isBrazil,
followed byMorocco andPortugal. Benin isaiming todouble cotton exports between 1995and2000.
France isbyfarBenin 'smainsupplier, with18percentofofficially recorded imports, butthesources
ofimports arealsoverydiversified. When re-exports ofimported products, which represent about
40percentofestimated totalexports, andtheinformal trade aretaken intoaccount, Benin 'sprincipal
trading partner isNigeria, probably followed bytheNiger.
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5. Apart from cotton, exports include crude petroleum, fresh fruit, cashew nutsandpalm oil.
Theimports arerice,other cereals andnewandusedmanufactured goods, allpartly re-exported.
Tothesemustbeadded thepetroleum products imported bytheSociété nationale decommercialisation
desproduits pétroliers (SONACOP) andbyindividual informal-sector importers.
6. Benin hastaken hardly anyadvantage ofcommitments totheGATT, nowtheWTO, toconfirm
theopening upofitseconomy andtrade. Allitsimport duties onagricultural products were bound
inthecontext oftheUruguay Round atceiling ratesconsiderably higher thanthetariffs applied. At
thesame time, onlytheduties applicable toafewindustrial products werebound; fortherest,tariff
bindings dating from1964remain inforce andhavenever beenrenegotiated despite important changes
inthenature andleveloftheduties, aswellasinthenomenclature. Ageneral binding would enable
theauthorities toconfirm theopening upoftheimport regime andwould afford traders andinvestors
greater certainty.
(2) Institutional framework
7. Benin hasbeenanindependent andsovereign republic since 1August 1960. ThePresident
oftheRepublic istheheadofState; astheholder ofexecutive power, hedetermines andguides State
policy, appoints themembers oftheGovernment andassigns theirfunctions. TheMinistry ofTrade,
Handicrafts andTourism isresponsible forformulating, implementing andadministering tradepolicy,
incollaboration withtheMinistry ofFinance. Asingle National Assembly, whose deputies areelected
bydirect universal suffrage forfouryears, exercises legislative power. Itvotes thelaws, including
thefinance billswhich determine theState'srevenue andexpenditure objectives.
8. Theinternational treaties andagreements, including theAgreement ontheWTO, havetheforce
oflawassoonasratified, noimplementing regulations being required. Under theConstitution, they
takeprecedence overdomestic laws. Thus, inprinciple, theprovisions oftheWTO Agreement can
beinvoked inBenin courts. Foreign trade andtheactivities offoreign companies were thesubject
ofseveral lawsadopted in1990following theopening upoftheeconomy totheprivate sector. Since
then, theprincipal tariffreduction andprivatization andgovernment procurement measures havebeen
adopted within thecontext ofinternational structural adjustment agreements.
9. Within thefranc zone, Benin forms partoftheWest African Economic andMonetary Union
(WAEMU) which alsoincludes Burkina Faso, Côted'Ivoire, Guinea-Bissau, Mali, Niger, Senegal
andTogo andwhose issuing authority istheCentral Bank ofWest African States (BCEAO) which
isresponsible fortheUnion 'smonetary policy. Thetreaty establishing theWAEMU provides for
thecreation, asfromJanuary 1998, ofacustoms union withacommon external tariffwhich willinclude
several countries whose tariff andnon-tariff protection isconsiderably higher thanthatofBenin. The
authorities areaware ofthedanger which further barriers totrade would represent fortheBeninese
economy, theimport andre-export tradeconstituting asignificant proportion ofthecountry 'seconomic
activity.
10. BeninisalsoafoundermemberoftheEconomicCommunityofWestAfricanStates(ECOWAS),
whose membership consists ofthemembers oftheWAEMU plusCapeVerde, Gambia, Ghana, Guinea,
Liberia, Mauritania, Nigeria andSierra Leone. TheECOWAS tradeliberalization programme includes,
inprinciple, theabolition, asfrom 1994, ofallnon-tariff barriers toCommunity trade andthefree
circulation ofapproved products within theCommunity, atthelatest by2000. About 6percentof
Benin 'sofficially recorded imports come fromECOWAS. Benin benefits fromnon-reciprocal trade
preferences under thedeveloped countries 'General System ofPreferences andfrompreferential access
totheEuropean Union market under theLomé Convention.
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(3) Trade andinvestment policy features andtrends
(i) Recent evolution
11. Thelasttenyears havebeencharacterized bytheprogressive liberalization oftrade barriers
withtheelimination ofquantitative import restrictions in1988, theabolition ofimport licences in1991
andtheelimination ofimport price lists. Thetariff reforms of1991and1994 resulted inthenumber
oftaxes levied onimports being reduced totwoandtherange ofdutyratescontracting from 16to
5,while export taxes werealmost entirely eliminated. TheGovernment introduced value-added tax
in1991 andlowered andsimplified direct taxes, while atthesame timeextending thetaxbase.
12. Since 1990, several newlawshavebeensubmitted totheNational Assembly tomake trade
andinvestment conditions more reliable andattractive, inparticular adraftgovernment procurement
code, adraftlawoncompetition, adraftcustoms codeandadraftinvestment code, noneofwhich
hasyetbeenadopted. Inpractice, theexistence ofalargeinformal sector creates acompetitive climate.
(ii) Type andincidence oftrade andinvestment policy instruments
13. Trade andinvestment policy andpractices havethedualaimofencouraging thedevelopment
oflocalenterprises without increasing thecostofgoods andservices ininternational trade, given the
importance offoreign trade asasource ofincome. Thepresent leveloftrade protection inBenin is
therefore among thelowest inAfrica. Taxinstruments, inparticular neartotalexemption fromdirect
andindirect taxes, arethechief means ofproviding assistance forbusinesses.
14. Benin accords atleastMFN treatment toimports, whatever theirorigin. Ithasnotyetadopted
theHarmonized Commodity Description andCoding System (HS). Thecustoms tariff, based onthe
Customs Cooperation Council Nomenclature (CCCN), provides fortwoMFN rates: fiscal duty, which
varies from 0to20percent, andthecommunity solidarity levyof1percent, which isintended to
compensate forthelossofcustoms revenue associated withthepreferential agreements. These import
taxes, which aresolely advalorem ,amount onaverage to13percent,buttheeffective collection rate
ismuchlowerbecauseofnumerousexemptions.SomeproductsfromthemembercountriesofECOWAS
andWAEMU qualify fortariff reductions.
15. Value-added tax(VAT) wasintroduced in1991 attherateof18percent. Three quarters of
Benin 'sVAT revenue iscollected onimports. Thisborder taxation, favoured because itisrelatively
easytotaxgoods astheyenter thecountry, iscreating strains inthecustoms system byencouraging
operators tominimize thevalue ofthegoods declared. Asystem ofpreshipment inspection ofimports
isinforce butisnotbeing applied togoods imported bythe"occasional" importers whoaccount for
asubstantial proportion oftheimport trade.
16. TherearenumerousexemptionsfromcustomsdutiesandVATwhichcreateseriousadministrative
complications thatcould distort tradeandencourage irregularities. AllGovernment contracts andmost
investment areexempt fromimport duties andVAT. Most imports ofinputs bylocalenterprises are
dutyfree. Considering thevitalcontribution totherevenue made bytheduties collected bycustoms
andtheimportance ofimports fortheeconomy, Benin would certainly benefit frommore transparent
customs andportregulations andcloser control andmonitoring ofimports tocurbtaxfraud. This
would bemuch facilitated bytheelimination ofthespecial import regimes.
17. Exports, ofindigenous products orgoods intransit, aremainly free,except inthecaseoffood
cropproducts, cotton andwood intherough whose exportation isofficially prohibited. Benin forbids
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theexportation ofproducts whose importation isprohibited inthecountry ofdestination, which could
encourage those whotrade withthose countries toavoid thecustoms posts.
(iii) Sectoral policies
18. Trade policy hasnotbeenliberalized tothesame degree inevery sector ofactivity. Some
sectors, inparticular theagri-food industry, havebeenbroadly exposed tointernational competition,
whereas others remain protected bymonopolies, exclusive traderights andimport prohibitions, notably
intheservice sectors. TheGovernment 'sobjective ofencouraging investment andfoodproduct exports
would necessitate arevision ofthelandtenure andtrade legislation inforce inthese sectors, inorder
tofacilitate landpurchase andexports, inparticular offoodcropproducts.
19. Inthecotton sector, Benin isapplying ahighly interventionist policy intended toincrease
production inorder togenerate taxrevenue. Thus, theState hasamonopoly onthepurchase ofthe
entire seedcotton output, while providing theinputs andadministering producer prices. Thelevies
onthissector represent onefifthoftheState budget. Theenvironmental authorities recognize that
present cotton production methods arenotecologically viable. Theassistance granted tothecotton
producershasdivertedresourcesfromothercrops;in1994,againstabackgroundoflocalfoodshortages
duetothedifficulties ofprovisioning theruralareas, theGovernment decided toprohibit exports of
foodcropproducts.
20. Ingeneral, theagricultural product processing sectors (oils, beverages, food, textiles), which
aretoalargeextent exposed tointernational competition, arerecording profits andhavereceived most
ofthemodest investments made inrecent years. Thecement sector, protected fromimports byaban,
wasliberalized inMay1997. Most oftheservice sectors, inparticular telecommunications, energy,
non-life insurance andairtransport, areorganized aspublic monopolies andhandicapped bytheState's
limited capacity forinvestment. Theresulting delay inadapting tonewtechnologies andmarket trends
istaking itstollinterms ofcostsandefficiency ontheeconomy asawhole, which illustrates theneed
toapply tothese sectors thederegulation inprogress elsewhere intheeconomy.
(4) Trade policies andforeign trading partners
21. Benin 'scommitment totheprinciple offreetrade isensured byitsroleasacommercial hub.
Despite belonging toaregional economic area, thecountry trades withthewhole world, largely on
aMFN basis. Inorder tomanage thechanges inthetrade policies ofitsprincipal regional partners
tobesteffect, itisinBenin 'sbestinterest tobinditspolicies totheprinciples ofthemultilateral trading
system. Theimplementation oftheUruguay Round Agreements willmake possible ageneral review
ofthegoals ofitstrade, fiscal andsectoral policies andfavour economic liberalization inthose sectors
inwhich ithasnotyettaken place.
22. Therapid andexhaustive application oftheprovisions oftheAgreement ontheWTO would
provide theeconomic operators, domestic andforeign, withastable andtransparent framework within
which todobusiness. Further simplification ofthetrade regime would alsomake asignificant
contribution tothedevelopment ofsuchaframework, aswould harmonization ofthelegislation with
business measures andpractices. These efforts would beencouraged bygreater support fromBenin 's
moredeveloped economic partners. TheGovernment could signal itscommitment toreform byopening
upthenumeroussectorsofactivitysofarinaccessibletoforeigninvestment,suchastelecommunications,
airtransport, energy and,toalarge extent, agriculture, which would offerrealpossibilities interms
ofemployment, technological progress andeconomic growth.
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TRADE POLICY REVIEW BODY
BENIN
Report bytheGovernment
TheRepublic ofBenin covers anareaofabout 112,600 km2which isdivided, foradministrative
purposes, intosixprovinces (départements ),eachgoverned byaprefect (Atacora, Atlantique, Borgou,
Mono, Ouémé andZou). In1996, thepopulation ofBenin wasabout 5.4million, increasing atan
annual rateof3.1percent.
Annual percapita income isabout US$370, placing Benin among theworld 'sleastdeveloped
countries.
Inreviewing Benin 'seconomic situation, itisimportant tostress thatthetransition, in1990,
fromasingle-party regime toapluralist democracy marked theendoftwodecades ofplanned economy.
Theeconomic situation inBenin began todecline in1987, andfrom 1986 to1989 Benin
experienced, inrealterms, anegative GDPgrowth rate.In1990, Benin opted forapluralist democratic
regime andapolicy ofeconomic liberalization.
Development policies havefocused primarily onmacroeconomic stabilization through three
structural adjustment programmes under theauspices oftheInternational Monetary Fund (IMF) and
theWorld Bank.
Thanks totheadjustment policies, theeconomy hasachieved remarkable performances.
Benin 'sprincipal reforms havebeenintroduced intheframework ofitsSecond Structural
Adjustment Programme launched in1991withtheassistance oftheIMFandtheWorld Bank. Thanks
tothisprogramme, theoverall situation inBenin hasconsiderably improved andsubstantial progress
hasbeenachieved.
Indeed, theGDPhasgrown byanaverage of4percentinrealterms thanks tothecultivation
ofcotton. Public finances havebeenstabilized, andtheprimary balance reached 2.2percentofGDP
asof1992owing toasustained effort toincrease revenue, control spending, steadily reduce thebudget
deficit andraisetherateofgovernment investment. Domestic arrears were practically cleared, and
thebanking system wasrebuilt.
Thepolicy ofreorganizing Benin 'spublic finances wasgiven anadded impetus in1994 with
themodification oftheCFA franc'sexternal parity aimed atstimulating theexport andtheimport
substitution sectors aswellasinvestment andcapital inflow.
In1996, intheframework oftheThird Structural Adjustment Programme, thenewGovernment
adopted amacroeconomic strategy consisting of:
- Ensuring sustained growth ofthenational economy;
- strengthening thecountry 'ssocial infrastructure; and
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- improving thecountry 'spublic finances inorder toreduce thedebtburden andits
dependence ontheoutside world.
Inorder toattain these objectives, theGovernment setitselfthetaskofpromoting investment
anddomestic saving while redirecting itsresources towards thepriority sectors.
A. TRADE POLICY AND PRACTICE
(1) General trade policy objectives
ThenewGovernment formed inthewake ofthepresidential elections ofMarch 1996 plans
totakeeffective steps toconsolidate thefoundations ofBenin 'seconomic andsocial development.
On15May 1997, thePresident oftheRepublic andHead ofGovernment published the
Government 'splanofaction, reflecting apolicy aimed atcreating acompetitive andproductive economy
resting ontheprivate sector.
TheGovernment 'sgeneral objectives inthisrespect are:
- Toliberalize trade;
- tosupport theprivate sector through thedevelopment oftrade;
- tocontain theincrease intheprice ofmass consumption goods;
- topromote thedevelopment oftourism andhandicrafts; and
- topromote theprivate sector by:
- supporting existing enterprises andfacilitating thecreation anddevelopment
ofnewenterprises;
- streamlining theformalities involved insetting upenterprises;
- creating anindustrial freezoneinCotonou; and
- creating anopportunity centre.
(2) Sectoral trade policy objectives
(a) Agriculture
TheGovernment 'sagricultural policy focuses on:
- Promotion oflocalagricultural produce;
- strengthening offoodsafety;
- diversification ofagricultural production; and
- development ofagricultural exports.
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Tothatend,theGovernment plans tomodernize anddevelop agriculture through measures
aimed at:
- Improving production methods toincrease output andreduce pressure ondomestic
prices;
- Promoting localindustries, interaliabyorganizing "open days" forexisting industries
andcreating thenecessary structures forconsultation among theactors inthedifferent
subsectors: textiles, fruitandvegetables, cashew nuts,oilseeds, cassava andcement;
- ensuring thepermanent availability ofsufficient water resources forpasture farming
andfisheries. Tothatend,anumber ofmicro-dams andimpoundments areplanned;
- introducing systems forthefinancing ofagriculture through thecreation ofan
agricultural bankbacked byprivate partners;
- improving theperformance ofthedifferent agricultural subsectors through public and
private nursery production andsubsidization ofthepurchase ofselected seedlings;
and
- rehabilitation andextension oftheruralaccess roadnetwork through roadworks and
maintenance.
(b) Energy
Benin 'spolicy inthefieldofenergy reflects adetermination toachieve energy self-sufficiency
andtoelectrify theentire country atthelowest possible cost.
Tothatend,theGovernment plans to:
- Supply alloftheprovincial capitals withelectricity bybuilding thermal power stations,
linking them tothegridinterconnecting certain provincial capitals andurban centres
andelectrifying certain towns through solar energy;
- rehabilitate andextend theelectricity gridinthecities; and
- increase electricity generation capacity bybuilding theAdjarala dam, interconnecting
theNEPA (Nigeria) gridwiththeCEB(Benin-Togo) gridandconstructing agas-driven
thermal power station.
(c) Industry
TheGovernment 'sobjectives inthisareafocus onsupporting private initiative through measures
suchas:
- RevitalizationofcertainproductionunitsthroughtheprivatizationoftheSociétésucrière
deSavé, theBrasserie d'Abomey, theSociété desciments d'Onigbolo, andtheSociété
nationale d'industrie descorps gras(SONICOG);
- streamlining oftheformalities involved insetting upenterprises;
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- creation ofserviced industrial zones inalloftheprovinces; and
- creation ofanindustrial freezoneinCotonou.
(d) Services
Thereorganization ofBeninese financial services isoneoftheprerequisites todevelopment
oftheprivate sector.
Thisiswhythemodernization ofthebanking sector isoneoftheGovernment 'spriorities.
Hence, therestructuring oftheBeninese banking sector atthebeginning of1990s. Since then, five
trade banks havebeenauthorized tosetup.These banks account for90percentofsavings inthe
formal sector, andareabletomeetdevelopment financing needs.
Inthetransport andcommunications sectors, theGovernment 'sobjective istoensure the
maintenance andrehabilitation ofinfrastructure andaccess toatransport andcommunications network.
Tothatend,theGovernment istaking measures to:
- Develop theroadnetwork byrestoring theearth andpaved roads andasphalting the
trunk roads, andbybuilding athirdbridge inthecityofCotonou;
- improve thecompetitiveness oftheautonomous portofCotonou bybuilding acontainer
terminal;
- modernize theairport facilities through therestoration ofthefreight andpassenger
terminals ofCotonou andthesecondary airfields;
- revitalize therailway network byrestoring railway lines, modernizing theequipment
oftheOrganisation commune Bénin-Niger deschemins defer(OCBN) andputting
thecoastal railway linesintoservice.
Inthetelecommunications sector, theobjective istoboost theefficiency ofthenational telephone
network andreduce telecommunication service costs forBeninese enterprises.
Promotion ofthetourist sector isoneoftheGovernment 'spriorities. Indeed, Benin hasa
number ofuntapped tourist attractions.
Accordingly, theGovernment plans totakemeasures aimed at:
- Developing tourist sitesandaccess roads inalloftheprovinces inorder tofacilitate
access andincrease thenumber ofvisitors inthebestpossible conditions;
- introducing apolicy ofprivate-sector construction anddevelopment oftourist andhotel
infrastructure.
Inthefieldofhandicrafts, government promotion activities aredirected towards:
- Thecreation ofchamber oftrade;
- thepreparation andintroduction ofacodeofhandicrafts;
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- theimplementation ofapolicy ofencouraging theconstruction ofcraftvillages bythe
private sector;
- theorganization ofsalesexhibitions ofBeninese handicrafts abroad.
(3) General description oftheimport andexport regime
Intheframework ofthetrade liberalization policy, legalorregulatory provisions thatwere
considered restrictive were forthemost parteliminated oramended.
(a) Imports
Import licences were eliminated intheframework oftheStructural Adjustment Programme
(Law No.90-005 of15May1990 andLawNo.93-007 of29March 1993) inaneffort topromote
economic liberalization.
However, theimport ofcertain products isprohibited forhealth reasons, forexample, rumps
ofturkey(InterministerialOrderNo.347/MCAT/MDRAC/MSP/CAB/DCE/DCIof24December1990).
Theimportation ofgoods thataredangerous tohuman health andState security issubject to
aspecial authorization.
(b) Exports
Beninese products merely require anauthorization from theDirectorate ofForeign Trade.
Only foodcrops aresubject toatemporary prohibition.
Thistemporary suspension wasmade necessary byashortage onthedomestic market following
abreakdown infoodself-sufficiency.
Inorder tomaintain thecountry 'snatural resources (flora), exportation ofteakintherough
isprohibited, andonlyprocessed wood maybeexported.
(4) Trade policy framework
(a) Laws andregulations governing theimplementation oftrade policy
TheConstitution isthesupreme lawoftheRepublic ofBenin. Legislative power isinthe
hands ofasingle national assembly.
TheNational Assembly votes thelaws, including financial lawssetting oftheGovernment 's
income andexpenditure targets.
ThePresident oftheRepublic hasthepower tonegotiate andconclude international agreements,
andmaydelegate thatpower toaminister oramember oftheExecutive. Where itisnecessary to
amend lawstomake them consistent withtheprovisions ofanagreement, theParliament must vote
alawauthorizing thatamendment.
Trade policy isapplied byseveral government institutions andexecutive bodies.
TheMinistry ofTrade, Handicrafts andTourism may, ifneedbe,submit draftlaws.
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Thelawsrelating totrade cover several areas:
- Tourism;
- control ofgoods;
- competition;
- weights andmeasures;
- investment;
- banking andfinance;
- trade activities;
- privatization.
(b) Formulation andreview oftrade policies
TheMinistry ofTrade, Handicrafts andTourism isresponsible fordevising, implementing
andadministrating trade policy. Once drawn upbytheMinistry, lawsaresubmitted forexamination
andapproval bytheLegislature.
TheMinistry ofTrade, Handicrafts andTourism draws uptradepolicy measures inconsultation
withtheprivate sector (Chamber ofTrade andIndustry ofBenin) andtheother competent institutions
(Ministry ofFinance, Directorate-General ofDuties andIndirect Taxes), theMinistry ofPlanning,
Economic Restructuring andEmployment Promotion, theMinistry ofIndustry andSmall and
Medium-Sized Enterprises, etc.
(c) Multilateral, bilateral andregional trade agreements
Government policy inrespect ofmultilateral, regional andbilateral tradeagreements isdirected
towards thecreation ofafavourable environment fortheintegration ofBenin intotheinternational
economy withaviewtoensuring outlets foritsproducts andfostering thedevelopment ofitsindustries.
Thefollowing aresome oftheagreements concluded byBenin:
- Agreement Establishing theWorld Trade Organization (WTO);
- theLomé Convention Between theACP andtheEU;
- theECOWAS Treaty;
- theWAEMU Treaty.
Benin isasignatory totheFourth Lomé Convention between theEuropean Union and71ACP
States. Under thisConvention, itsexports ofindustrial andagricultural products notcovered under
theCommonAgriculturalPolicy(PAC)enjoyduty-freeentry(non-reciprocal)totheCommunitymarket.
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Having become afounding Member ofGATT in1963Benin, uponauthorization bytheNational
Assembly (Decree No.95-241 of5September 1995), ratified theAgreement Establishing theWTO,
thusbecoming aMember ofthatOrganization on22February 1996.
Benin isconvinced thattheAgreement Establishing theWTO willserve theinterests ofthe
developing countries ingeneral andtheLDCs inparticular. However, thesecountries willneedgreater
assistance inorder tofullyprofit from thevarious WTO Agreements.
Benin isamember oftheEconomic Community ofWest African States (ECOWAS) andhas
espoused theideaofcreating aregional common market, asingle currency andacustoms union within
theWest African Economic andMonetary Union (WAEMU).
(5) Implementation oftrade policy
(a) Thetrade policy measures applied inBenin are:
- Customs duties
Since 1989, Benin hasbeenfirmly committed tothepathofeconomic liberalization which
led,in1991, toamajor tariffreform. Thisreform involved thestreamlining ofthenumerous existing
levies intofourgroups:
- customs duty: 5percent(suspended);
- community solidarity levy(PCS): 1percent;
- fiscal import duty: 0percent, 5percent, 10percent, 15percentand20percent;
- value-added tax(VAT): 18percent.
Asindicated above, there arefiveratesoffiscal dutyaccording tothetariff class.
Thedocuments required forcustoms transactions aretheimporter 'scard; thepurchase invoice;
theinvoice showing theinsurance premium; thecertificate oforigin; thecustoms valuation certificate;
and,where applicable, thephytosanitary certificate.
- Customs valuation andpreshipment inspection
Customs valuation iscurrently based onthetransaction value ofthegoods. Theprinciples
governing customs valuation inBenin arebased onArticles 24,25,27and28oftheCustoms Code.
Acompulsory preshipment inspection system hasbeeninforce since 1991. Allimports of
goods must comply withtheformalities oftheinspection company which consist of:
- Preparing animport application forallinvoices exceeding CFAF 3million (bysea);
- having thegoods controlled prior toshipping;
- producing thefinalinvoice afterinspection;
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- obtaining acustoms valuation certificate which must besubmitted tothecustoms
authorities during customs clearance.
Incases ofundervaluation, theinspection company rejects thevalues appearing ontheinvoice
andmakes thenecessary adjustments onthebasisoftheinformation available intheimporting country
ortaking account ofthevalue oflikeproducts, mentioning suchadjustments onthecustoms valuation
certificate.
(b) Current trade liberalization programme intheframework oftheStructural Adjustment
Programme
From 1975to1989, Benin 'seconomy washeavily regulated under aneconomic strategy which
relied onthepublic sector forinvestment andgrowth. Theresults didnotliveuptoexpectations.
In1989, Benin launched aneconomic liberalization programme withthesupport oftheInternational
Monetary Fund andtheWorld Bank.
Indoing so,theGovernment 'sobjective wastocreate anenvironment favourable tothe
development ofprivate initiative. Tothatend,thefollowing measures were taken:
- Elimination ofimport licensing andimport andexport restrictions;
- adaptation ofBenin 'slaws andregulations tothenew, highly liberal economic
environment.
B. ECONOMIC REFORM PROGRAMME
Trade policy isbutoneelement ofabroader policy covering investment, tourism, transport,
financial services, etc.
Alloftheseelements arelinked, intheirturn,tothemainfeatures ofaneconomic policy which
aimstoguarantee prosperity foralloftheBeninese people andsustained economic growth.
During the1980s, Benin underwent aserious economic crisis, andstarting in1989, withthe
helpoftheInternational Monetary Fund andtheWorld Bank, ithadtointroduce astructural adjustment
programme aimed atstabilizing theeconomy, reversing thedecline inthestandard ofliving, achieving
sustainable growth andimproving theexternal payments position.
Onthemacroeconomic side,theGovernment adopted astrategy fortheperiod from1996 to
1999, consisting of:
- Ensuring sustained growth ofthenational economy;
- strengthening thecountry 'ssocial infrastructure; and
- improving thecountry 'spublic finances inorder toreduce thedebtburden andits
dependence ontheoutside world.
Inconnection withthisstrategy, ithassetitself thefollowing goals:
- Toensure average GDP growth rateof6percent;
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- tomaintain inflation atalevelofabout 3to4percentperyear;
- toreduce thecurrent external deficit (excluding grants) to5.5percentby1999.
Thisexternaldebtreductionistobeachievedbydiversifyingexportsandensuringthesatisfactory
performance ofthecotton sector.
Inorder toattain these goals, theGovernment hassetitself thetaskofpromoting domestic
investment andsaving while redirecting resources towards thepriority sectors.
Inthisrespect, itaimstoraisetheaverage rateofgovernment investment toabout 7.8per
cent.
Tofinance theincreased investment without negatively affecting thebalance ofpayments, the
domestic savings ratewillhavetoincrease from 9percentofGDP in1995 toapproximately 13per
centin1999.
Thus, budgetary policy willbedirected towards agradual increase inpublic savings, inspite
ofthedecrease inexternal transfers.
Thispolicy should make itpossible toimprove thecurrent account balance, which should go
from 8.6percentofGDP in1995 to5.5percentofGDP in1999.
Thevolume ofexports, notincluding re-exports, should increase by9.6percentfrom 1997
to1999, while re-exports should continue togrowandimports notintended forre-export should increase
byapproximately 6.5percentinrealterms during thesame period.
Withrespect more specifically tothedevelopment oftheprivate sector andthediversification
ofeconomic activity, theGovernment hasopted for:
- Promotion ofnon-traditional exports andthereduction intransports costs;
- creation ofasingle window forinvestors andthepromotion ofanindustrial freezone;
- improvement ofthefiscal andlegalclimate andthestrengthening ofthejudicial system.
CONCLUSION
Ascanbeseenfrom thistrade policy review, Benin isrelentlessly pursuing itseconomic
liberalization programme. Inaccordance withthatprogramme, andwithaview tocreating an
institutional environment more favourable tothedevelopment ofbusiness, acertain number ofreforms
arecurrently under way,including therevision oftheLabour Code, theMining Code, theCommercial
Code, theCivil Procedures Code andtheAdministrative Code.
Theintroduction ofacentre forbusiness formalities (single window) aimed atbringing the
public sector closer totheprivate sector ispractically areality.
Thesimplification ofadministrative procedures, theimprovement oftheInstitutional Code
andtheadaptation ofBeninese lawsandregulations tothenew,highly liberal economic environment
allfocus onthesame target: thecreation ofanenvironment inwhich aliberal economy canflourish.
Thepropermanagementofaliberaleconomycallsforthestrengtheningofdemocracy,improved
governance andfurther structural reform.
END