Benin - Market OverviewBenin - Market Overview
Benin is a stable democracy with a small domestic market. The country’s economy is heavily dependent on trade ties to its neighbors, particularly Nigeria. Benin’s overall macroeconomic conditions were positive in 2017, with a growth rate of around 5.6 percent. Economic growth was largely driven by Benin’s cotton industry and other cash crops, the Port of Cotonou, and telecommunications. Cashew and pineapple production and processing have substantial commercial potential. The country’s primary source of revenue is the Port of Cotonou, although the government is seeking to expand its revenue base. A large informal sector, estimated at over 70 percent of GDP, is based primarily on unregulated trade with Nigeria.
In 2017, Benin imported about $2.8 billion in goods such as rice, meat and poultry, alcoholic beverages, fuel plastic materials, specialized mining and excavating machinery, telecommunications equipment, passenger vehicles, and toiletries and cosmetics. Benin’s total exports were $695.60 million in 2017. Principal exports are ginned cotton, cotton cake and cotton seeds, cashew, shea butter, cooking oil, and lumber. Benin’s chief import partners include the United Arab Emirates, Brazil, China, Germany, Spain, France, India, Malaysia, the Netherlands, Togo, and Thailand. In 2016 Benin’s chief export partners were Bangladesh, China, Malaysia, Niger, and Nigeria.
Currently trade volumes between Benin and the U.S. are small. The 2017 trade balance is in favor of the U.S., dropping from $635.1 in 2015 to $232.3 million in 2016 and 2017.
Benin leverages its port as a platform to reach over 100 million consumers in neighboring landlocked countries such as Burkina Faso, Mali, Niger, and Chad, and 155 million in Nigeria.
While Benin’s immediate energy needs are severe, the government has announced an ambitious plan to meet latent demand during the next decade. Private sector engagement in independent power production aims to increase electrical power production and reduce Benin’s dependence on Nigeria and Ghana. The Government promotes build-operate-transfer (BOT) projects to reach its stated goal of 4,000 megawatts (MW) available through power plants and hydropower dams with the prospects to export to the surplus to neighboring countries. A second Millennium Challenge Corporation (MCC) compact entered into force in 2017, with $375 million devoted entirely to power sector improvements. The Benin Power Compact is advancing policy reforms to bolster financing for the electricity sector, attract private capital into power generation, and strengthen regulation and utility management. Infrastructure funded by the compact includes 46 megawatts of power generation capacity, modernization of the Cotonou and regional distribution grid, and expansion of minigrids. As two thirds of Benin’s population does not have access to electricity, the compact also includes a significant off-grid electrification project via its clean energy grant facility.