Benin

Benin’s economy has continued to strengthen over the past years, with real GDP growth estimated at 5.1 percent and 5.7 percent in 2008 and 2009, respectively. The main driver of growth is the agricultural sector, with cotton being the country’s main export, while services continue to contribute the largest part of GDP largely because of Benin’s geographical location, enabling trade, transportation, transit and tourism activities with its neighbouring states.

The country continues to maintain a favourable macroeconomic outlook, even though the financial crisis has brought significant inflationary pressures as a result of higher food and fuel prices. Inflation soared to 12 percent in September 2008, after maintaining an average of 1.3 percent in 2007. The external current account is expected to widen from 7.4 percent of GDP in 2007 to 10.4 percent in 2008, reflecting the terms of trade shock.

Benin’s financial sector is dominated by banks, and in general remains shallow. However, a series of reforms were undertaken in the 1990s, which resulted in the consolidation of the banking sector and in the privatization of all state banks.

A legal framework regarding licensing, bank activities, organizational and capital requirements, inspections and sanctions (all applicable to all countries of the Union) is in place and underwent significant reforms in 1999. There is no customer deposit insurance system.

Benin has a lively and diversified microfinance sector. Data from 2003 by the Central Bank stated a penetration rate of microfinance services of almost 60 percent. In 2006 the Ministry of Microfinance and Employment of Youth and Women counted 762 organizations with 1308 branches, including Cooperatives, NGOs, Savings/Credit Associations and government projects. Programmes for strengthening the sector are carried out on national and regional levels, such as the PRAFIDE (Programme Régional d’Appui à la finance Décentralisée). The microfinance sector is also subject to supervision through the Central Bank as well as the responsible Ministry for Microfinance and Employment of Youth and Women.

Benin is member of the regional Bourse Regional des Valeur Mobiliés (BRVM) located in Abidjan, Cote d’Ivoire. Stocks were issued by a number of companies in the region. Listed bonds were partly issued by companies and partly by governments of the West African Monetary and Economic Union (UEMOA).

The payment and settlement system and clearing mechanisms were reformed in 2004 through the BCEAO and offer RTGS and SWIFT access to banks, financial institutions, the stock exchange as well as the Central bank and special banks.

The insurance sector in Benin remains relatively small, with insurance premia equivalent to 1.2 percent of GDP. Eight insurance companies, two of which are majority-owned by foreign companies, are involved in the provision of life and non-life insurance products. The two largest insurance companies controlled almost two thirds of the entire market, reflecting a high degree of concentration. Insurance supervision is carried out through the Direction du Contrôle des Assurances, reporting to Benin’s Ministry of Finance and the Commission Régionale de Contrôle des Assurances.

Two pension funds operate in the country, one for civil servants, and the other mostly for salaried employees of private sector companies. The first covers approximately 30,000 people, while the latter about 15,000 people.

Benin is part of the West African Monetary and Economic Union (UMEOA) and has thus adopted the CFA Franc, which is issued by the Central Bank of the West African States (BCEAO). The BCEAO is not only responsible for the monetary and reserve policy of Benin and the other member states, but also for the regulation and oversight of financial sector and banking activity. In particular, the Banking Commission within BCEAO is the overall responsible body for matters relating to financial sector supervision.

Remittances are an important source of foreign exchange for Benin. Formal remittances amounted to USD 173 million in 2006 (with USD 271 million estimated for 2008), equivalent to about 3.6 percent of GDP (4.1 percent for 2008).

Sources

Central Bank of West African States (BCEAO)

Bourse Régionale des Valeurs Mobilières

Economic Community of West African States (ECOWAS)

FSDI Sources - click here

For statistical coherence and comparability purposes, the FSDIs are extrapolated from a limited number of sources (AfDB, IMF, OECD, WB), where a common data collection methodology was applied to all countries surveyed. For additional data from other sources, please refer to the Documents section.