Benin

Highlights

• Benin ranks among the fastest-growing economies in the WAEMU zone, with real GDP growth estimated at 7.2% in 2021—an acceleration of 3.4 percentage points relative to 2020. Economic expansion has been driven by surging port traffic following the reopening of Nigeria’s borders, coupled with robust access to international capital markets through bond issuances and International Monetary Fund (IMF) Special Drawing Rights (SDR) allocations. Forecasts project GDP growth of 6.3% for 2022.
• Benin’s economic structure is dominated by the tertiary sector. Services contributed an average of 56.4% to GDP formation over 2016–2021, outpacing the primary sector (27.8%) and secondary sector (15.8%). This composition reflects the economy’s reliance on commerce, finance, and logistics.
• Benin maintains one of the lowest inflation rates in the West African region. Inflation stood at 1.7% in 2021, well below the WAEMU convergence threshold of 3%. Despite inflationary pressures observed across the Union and globally in 2022, Benin’s inflation remained controlled at an estimated annual average of 1.4%, demonstrating robust monetary discipline. Benin’s fiscal position has deteriorated progressively, primarily due to elevated expenditures and borrowing related to COVID-19 mitigation. The overall budget deficit as a share of GDP widened from 0.5% in 2019 to 5.5% in 2022, reflecting countercyclical fiscal measures and expanded public investment.
• Benin’s current account balance has deteriorated significantly. The current account deficit widened to 4.2% of GDP in 2021 and 6.2% in 2022, compared to 1.7% in 2020. This shift reflects increased imports for capital goods and recovery-related consumption. Public debt has risen substantially in recent years. The public debt-to-GDP ratio increased from 46.1% in 2020 to 50.3% in 2021, and further to an estimated 54.2% in 2022 according to IMF projections—an increase of 3.9 percentage points. While still manageable, this trajectory warrants close fiscal monitoring.
• Through its National Development Plan, Benin aspires to undertake a comprehensive structural transformation of its economy to achieve the following targets:
  • Economic growth rate of 10.2% by 2025, up from 5.7% in 2017;
  • Investment rate rising from 26.4% in 2018 to 33.2% for the 2022–2025 period;
  • Reduction of precarious employment to below 60% by 2025, down from 83.7% in 2015—signifying a shift toward formal sector job creation;
  • Poverty headcount reduction to 23.2% by 2025, down from 40.1% in 2015—targeting a measurable improvement in living standards across the population