Originally from:
Legal Aspects of Doing Business in Africa - Second Edition - Looseleaf
Legal Aspects of Doing Business in Africa - Second Edition - Digital
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Benin
Hantamalala Andrianarivelo, Camille Razalison, and Mirana Rasoanaivo
John W. F. Fooks and Co.
Introduction
Benin, a narrow strip of land running from the north to the south in West Africa, lies between the equator and the Tropic of Cancer. With an area of 112,622 square kilometers (43,484 square miles), Benin extends from the Niger River in the north to the Atlantic Ocean in the south, a distance of 650 kilometers (404 miles). Although the coastline measures 121 kilometers (75 miles), the country measures approximately 325 kilometers (202 miles) at its widest point.
Benin's economy has experienced modest growth, estimated at 3 per cent in 2011. This trend is expected to continue, with growth projected at 4.2 per cent in 2012 and 4.1 per cent in 2013.
The economy of Benin is dependent on subsistence agriculture, cotton production, and regional trade. Cotton accounts for 40 per cent of the gross domestic product (GDP) and approximately 80 per cent of official export receipts. Growth in real output has averaged approximately 5 per cent in the last seven years, but rapid population growth has offset much of this increase. Inflation has subsided over the past several years. Benin uses the CFA franc(CFAF or XOF), which is pegged to the euro.
Benin is a member of the West African Economic and Monetary Union (WAEMU),1 which maintains high tariffs. Modernization of customs procedures has generated some improvement in the ability to trade. Foreign investment is officially encouraged, and bilateral investment agreements with several countries protect investors’ rights. Banking is largely private, but access to credit remains low, despite the expansion of microfinance institutions.
The cost of starting a business is now slightly above the level of the average annual income, but obtaining the necessary business licenses is still timeconsuming. The labor market remains underdeveloped. Inflation has increased, largely because of chaos in the fuel market.
Basic social services and youth employment represent major challenges for the government in its efforts to improve the population’s living conditions.t. Benin’s economy has experienced modest growth, estimated at 3 per cent in 2011. This trend is expected to continue, with growth projected at 4.2 per cent in 2012 and 4.1 per cent in 2013.
Benin’s legal system is weak and subject to corruption. Businesses and other litigants routinely complain that corruption is particularly widespread at the trial-court level and in administrative hearings. There are no separate commercial courts, and backlogs of civil cases cause long delays. Despite several high-profile prosecutions, government corruption continues to impede development and deter investment.
