Benin is an African country stretching 700 kilometres from the River Niger in the north to the Atlantic coast in the south. The country has 121 kilometres of coastline along the Gulf of Guinea and shares borders with Nigeria to the east, Burkina Faso and Niger to the north and Togo to the west. It is therefore located at a major commercial and tourist crossroads.
Benin enjoys a stable political situation, with successive democratic alternations.
Benin, now classified as a lower middle-income country, has a population of 13.7 million and a gross domestic product of 17.1 billion US dollars.
Economically, Benin is dependent on the agricultural sector and formal and informal re-export and transit trade with Nigeria. The country is a member of the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (WAEMU).
Benin has maintained its growth momentum, despite persistent shocks, notably the closure of the border with Niger and economic difficulties in Nigeria. Economic activity grew by 6.6% in the second quarter of 2024, underpinned by dynamic industrial and agricultural production, as well as the resilience of the services sector. Inflation, which had doubled in 2023, fell to 1% in July 2024.
The increase in revenues has resulted in a substantial reduction in the budget deficit from 5.5% of GDP in 2022 to 4.1% in 2023. With the implementation of the medium-term domestic revenue mobilisation strategy, fiscal consolidation should make it possible to gradually reduce the budget deficit and achieve the regional convergence criterion of 3% of GDP in 2025. However, domestic revenue mobilisation is still among the lowest in the WAEMU, despite the progress made since 2020.
Debt levels have stabilised at 54.5% in 2023. The ongoing reduction in the budget deficit, combined with active debt management, have helped to maintain debt sustainability. Benin is at moderate risk of debt distress.
Nearly 85% of the workforce works in the informal economy. The short-term outlook depends on uncertainties linked to the geopolitical context, particularly security instability in the Sahel region and the consequences of climate change. In addition, the country is suffering from the overall inflationary pressures of recent months, particularly on foodstuffs.
The country has made significant progress in recent years, particularly in the health and education sectors. However, major efforts still need to be made to reduce the poverty rate. The rural exodus has led to a significant increase in the size of the country's major cities, particularly those on the coast, Porto-Novo, the capital, and Cotonou, the economic centre. The phenomenon of urbanisation, which is becoming more widespread throughout Africa, is posing increasing challenges for the authorities in terms of basic facilities, roads, health services, pollution problems, and so on.
A general cooperation agreement between Luxembourg and Benin was signed on 19 December 2022. The Grand Duchy of Luxembourg opened an embassy in September 2023 and LuxDev has been represented through a country office since February of the same year.
Evolution of activities in Benin (in thousand EUR)
Distribution of the 2023 disbursements by sector
All projects in Benin
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BEN/001Support for the agroecological transition and the implementation of sustainable food systems in the Mono Biosphere Reserve (Delta Mono)
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BEN/002Support programme to agricultural and rural training (ProFAR 2)
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BEN/003Construction programme for the École des métiers du tourisme, de l’hôtellerie et de la restauration
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BEN/005Inclusive and innovative finance
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BEN/006Digital development (BeDigital)
Projects in preparation in Benin
Project Code | Title | Sectors | Indicative Budget |
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BEN/004 | Agricultural training and professional integration in agricultural development pole no. 4 | Education, vocationnal training and employment | 10,200,000 EUR |
BEN/301 | Support programme for civil society organisations in Benin | Governance | 8,950,000 EUR |