Benin's geographical position makes this West African country an important commercial and tourist crossroads. From the River Niger in the north to the Atlantic coast in the south, Benin is 700 kilometres long. 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.
Benin enjoys a stable political situation with successive democratic alternations. In power since 2016, Patrice Talon's presidential parties won the legislative elections in January 2023.
Economically, Benin is dependent on the agricultural sector and on 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). Growth is expected to slow slightly to 6% in 2022, following a strong rebound to 7.2% in 2021. Agricultural production, particularly cotton and cashew nuts, and the services sector have boosted the growth rate. While the risk of debt distress continues to be considered moderate, public debt has risen sharply, from 41.2% of GDP in 2019 to 52.8% in 2022.
Thanks to its solid commitments to macroeconomic stability since 2016, the State has been able to rely on fiscal leeway to support economic activities during the COVID-19 pandemic. However, Benin's growth model remains fragile, notably due to its dependence on exports of unprocessed agricultural products (cotton, cashew nuts) and the re-export of imported goods and commodities (second-hand cars, rice, etc.) to Nigeria. Almost 85% of the workforce works in the informal economy. Domestic revenue mobilisation is insufficient. 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.
Thanks in particular to an increase in gross national income, Benin has been classified as a lower middle-income country since 2020. For the first time in its history, Benin has moved out of the low-income bracket, joining Côte d'Ivoire, Senegal, Cameroon and Morocco in the upper middle-income category. 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 major cities, particularly those on the coast, Porto-Novo, the capital, and Cotonou, the economic centre. The phenomenon of urbanisation, which is spreading throughout Africa, is posing ever greater challenges for the authorities in terms of basic facilities, roads, health services, pollution problems, and so on.
As regards bilateral relations between the two countries, Franz Fayot, Minister for Cooperation and Humanitarian Affairs, and Aurélien Agbénonci, former Minister for Foreign Affairs and Cooperation, signed a general cooperation agreement between Luxembourg and Benin 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.
In 2022, the Luxembourg Cooperation, through delegated cooperation with Enabel and the Agence Française de Développement (AFD), began its first support programmes in Benin, in the agriculture, forestry and fisheries sectors on the one hand, and education, training and employment on the other. In addition, as part of a joint mission to Benin in November 2022 and in the spirit of "Team Europe", LuxDev has signed a declaration of intent to collaborate and seek synergies with Enabel, AFD and Expertise France. In 2023, LuxDev has been given the mandate to formulate the future School of Tourism, Hotels and Catering, and is working with the embassy to identify projects in other sectors.
Sources: World Bank, beninpolitique.org