BENIN

Key conditions andchallenges

Table 12023

Population, million

13.7GDP, current US$ billion

19.6

GDP per capita, current US$1429.4

International poverty rate ($2.15)

a12.7
a43.4

a81.4

Lower middle-income poverty rate ($3.65)
Upper middle-income poverty rate ($6.85)
Gini index

a34.4

School enrollment, primary (% gross)b113.0b59.8

Total GHG emissions (mtCO2e)

26.4

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2021), 2017 PPPs.
b/ WDI for School enrollment (2022); Life expectancy(2021).

The 2023 Niger border closure, policychanges in Nigeria and climate shocks
moderated growth to 5.8 percent. The international poverty measure fell to 11.7
percent. A revenue based fiscal consolidation decreased the fiscal deficit to 4.5 percent of GDP, although public debt increased slightly to 55 percent. Growth
will settle at 6 percent potential from2024, but risks are rising, including fromtransit trade and insecurity.

Despite achieving high GDP growth rates
averaging 4.8 percent over 2010-2019, preCOVID GDP per capita grew at a modest
rate of 1.8 percent. Although experiencing
a post-2020 growth recovery of 3.8 percent
over 2021-22, this delivered few private
wage jobs and limited poverty reduction.
Vulnerable employment (including contributing family workers and own-accountworkers) declined by only 0.3 ppt over
2010-2021, from 88.7 percent of total employment to 88.4 percent, in contrast to 8.1
ppt and 3.8 ppt for structural and aspirational peers. This vulnerability reflects thestructure of Benin’s economy, with a largeshare of agriculture and prevalent informality. The closure of the Niger border following the July 2023 coup and the insecurity risks in the north of Benin disproportionately impacted poor and vulnerable households, slowing poverty reduction, and increasing fragility. Extreme climate events such as floods led to the declaration of a state of emergency in 32 municipalities, displacing 182,803 people andreversing poverty reduction.
The private sector is constrained by limited access to credit and lack of infrastructure, impeding productivity growthand job creation. Government action plans
have reduced the infrastructure gap,
though large investment projects andpressing expenditure needs combinedwith low tax revenue (10.5 percent of GDP

FIGURE 1 Benin / Key macroeconomic balances

Percent of GDPin 2015-22) led to rising debt levels, from30.9 percent of GDP in 2015 to 54.2 percent
in 2022. Accordingly, boosting revenues iscritical to sustainably finance increasing
development needs. As fiscal space is limited, private sector mobilization is central
for infrastructure investment.

Recent developments
Growth slowed to 5.8 percent in 2023 (3.0percent per capita terms), from 6.3 percent
in 2022, due to climate shocks undermining the agriculture sector (notably cotton),and uncertainties in neighboring countries
disrupting transit trade. The service sector
was impacted by the Niger border closureand diminished demand from Nigeria. The
expansion of the Glo-Djigbé Industrial Zone(GDIZ) and construction supported robust
growth of the secondary sector. Growth inagriculture combined with relatively low
inflation reduced the international poverty
rate ($2.15 a day, 2017 PPP) from 12.3 percent in 2022 to 11.7 percent in 2023.
Headline inflation doubled to 2.8 percent
in 2023 with the end of the gasoline subsidy in Nigeria, resulting in a 60 percent
increase in the price of smuggled gasoline, used by 80 percent of the population. To counter inflation across WAEMU countries, the Central Bank of West
African States (BCEAO) raised policy interest rates by a cumulative 150 basis
points since mid-2022 to 3.5 percent for
liquidity calls and 5.5 percent for the marginal lending facility. However, inflationin the region (3.7 percent in 2023) was

FIGURE 2 Benin / Actual and projected poverty rates andreal GDP per capita
Percent of GDP

60

050-140

Poverty rate (%)
90

8000008070000070-360-60-7

50000040000040

30000030-51060000050-420900000-230

Real GDP per capita (constant LCU)

100

20

2000001010000002018 2019 2020 2021 2022 2023e 2024f 2025f 2026f
Debt
Fiscal balance (rhs)
Current account balance (rhs)02011 2013 2015 2017 2019 2021 2023 2025

Source: World Bank.

International poverty rate

Lower middle-income pov. rate

Upper middle-income pov. rate

Real GDP pc

Source: World Bank. Notes: see Table 2.

MPO

1Apr 24still above the 1-3 percent target range
and foreign exchange reserves have been
on a downward trend, estimated at 3.5
months of imports at end-2023, downfrom 4.3 months at end-2022.
The fiscal deficit declined to 4.5 percent of
GDP driven by a 0.6 ppt increase in tax
revenue and spending rationalization of
1.2 ppt of GDP. Despite the increase in thepublic wage bill and security spending, thefiscal consolidation is on track with an increase in tax revenues and decline in capital expenditures. Although public debt
slightly increased to 55.0 percent of GDP(from 54.2 percent in 2022), the debt accumulation slowed down to 1.4 percent in
2023 in comparison to 9.6 percent in
2020-22. The current account deficit (CAD)
declined to 5.8 percent of GDP in 2023, driven by service exports (tourism), robust
export performance of industrial crops(cashew, soybeans, and palm oil), and reduced imports, offsetting a sharp decline
in cotton exports (62.8 percent of goods exports in 2021-22). The financing of theCAD was supported by debt, and FDI inflow to the Special Economic Zone.

Outlook
Growth is projected to stabilize at 6.0
percent between 2024 and 2026 (average
3.2 percent per capita terms), driven byinvestment and the GDIZ expansion. As
inflation is expected to moderate to an
average of 2 percent, consumption contributions to growth are set to increase.
Reforms to boost agriculture productivity
should increase output, while growth in
the secondary sector will be supported
by ongoing and new infrastructure investment under the PAG2 (GovernmentAction Program). The service sector
would benefit from the dynamism oftourism, and the resumption of transit
trade with neighboring States. Poverty
rates are expected to trend downward,
with the headcount rate ($2.15 a day,2017 PPP) declining from 11.7 percent in
2023 to 10.0 percent by 2025, supported
by robust economic growth.
The BCEAO may need to continue tightening in 2024 to bring inflation under

TABLE 2 Benin / Macro poverty outlook indicators

control regionally and in the context ofrising uncertainties over the withdrawalof Niger, Mali, and Burkina Faso fromECOWAS and potential spillovers toWAEMU. These uncertainties are likely toincrease investors’ risk perceptions leading to tighter financing conditions andputting additional strain on already low
foreign exchange reserves.
Through the 2023 Medium-term Revenue
Strategy, the government has committed
to mobilize additional revenue of 0.5 percent of GDP annually to support its fiscal
consolidation drive and reach the WAEMU
fiscal deficit target of 3 percent of GDP.
Lower debt accumulation will likely sustain public debt on a downward path toreach 52.1 percent by 2026. The CAD will
gradually decline to 4.8 percent by 2026,
due to higher exports from the GDIZ, financed by debt such as the US$ 750 million
Eurobond issued in 2024. Despite past resilience, downside risks remain. Headwinds may include prolonged transit tradedisruptions and climate-related shocks.
Worsening security risks are also a major
threat to development gains.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices
Private consumption
Government consumption
Gross fixed capital investment
Exports, goods and services
Imports, goods and services

2021
7.24.8
8.5
17.8
12.6
16.8

2022
6.3
5.0
3.5
12.9
19.1
18.5

2023e
5.8
3.2
11.4
5.6
2.9
0.1

2024f
6.0
3.8
5.0
8.6
8.0
5.1

2025f
6.0
3.9
6.4
7.6
7.9
5.0

2026f
6.0
3.8
5.8
8.1
8.3
5.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

6.6
5.2
9.1
6.6

6.0
4.8
7.9
6.0

5.8
4.7
7.5
5.7

6.0
5.2
7.8
5.8

6.0
5.4
7.3
5.9

6.0
5.5
7.0
5.9

Inflation (consumer price index)

1.7

1.4

2.82.02.0

2.0

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-4.2
1.7-6.2
1.9-5.8
1.6-5.4
1.6-4.9
1.6-4.8
1.7

Fiscal balance (% of GDP)
Revenues (% of GDP)
Debt (% of GDP)
Primary balance (% of GDP)

-5.7
14.1
50.3
-3.5

-5.5
14.3
54.2
-3.9

-4.5
14.9
55.0
-2.8

-3.8
15.2
54.1
-2.1

-3.0
15.7
52.9
-1.4

-3.0
16.0
52.1
-1.5

12.7
43.4
81.4

12.3
42.5
80.5

11.7
41.0
79.5

10.838.5
77.7

10.0
37.0
76.4

9.2
35.6
75.2

-0.4
30.6

0.2
29.7

-1.9
27.1

0.2
25.9

1.0
25.3

1.6
25.1

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower middle-income poverty rate ($3.65 in 2017 PPP)a,b
Upper middle-income poverty rate ($6.85 in 2017 PPP)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.
a/ Calculations based on 2021-EHCVM. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026.
b/ Projections using microsimulation methodology.

MPO2

Apr 24