Benin: Transit trade with Nigeria accounts for 20% of GDP


According to the COFACE economic forecast, Benin’s economic prospects are good. Its economy is expected to grow by 5.6% in 2018, thanks to its improved agricultural performance and Nigeria’s economic recovery. In the absence of major climatic shocks, cotton production, Benin’s main export product, is likely to increase. The inflation rate, estimated at 2% for 2018, remains below the UEMOA threshold of 3%. Informal trade continues to occupy a predominate position, with transit trade and re-export trade to Nigeria representing 20% of the GDP. Some 80% of Benin’s imports are destined for Nigeria. The completion of a railway line connecting Cotonou to Niamey might further boost activity at the Cotonou’s port. The government’s 2016-21 action plan, “Revealing Benin,” aims to develop Benin’s untapped business potential through 45 flagship projects and a new law on public-private partnerships. However, Benin still has a long way to go to improve its business environment. It is currently ranked at position 151 (out of 190 countries) on the World Bank’s Doing Business Index. Benin’s narrow and volatile export base, its strong dependence on Nigeria, its erratic electricity supply and governance shortcomings are among the weaknesses that impede Benin’s development prospects.


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