2017 Index of Economic Freedom

Benin

overall score59.2
world rank96
Rule of Law

Property Rights36.0

Government Integrity31.3

Judicial Effectiveness29.4

Government Size

Government Spending85.9

Tax Burden68.6

Fiscal Health71.3

Regulatory Efficiency

Business Freedom51.9

Labor Freedom52.4

Monetary Freedom85.4

Open Markets

Trade Freedom68.7

Investment Freedom80.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 10.9 million
  • GDP (PPP):
    • $22.9 billion
    • 5.2% growth
    • 5.2% 5-year compound annual growth
    • $2,113 per capita
  • Unemployment:
    • 1.1%
  • Inflation (CPI):
    • 0.3%
  • FDI Inflow:
    • $229.3 million
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Entrepreneurs in Benin benefit from a relatively stable political and macroeconomic environment. The government has introduced structural reforms to promote diversification and modernization. However, inefficient regulations and the lack of political momentum to fully implement necessary reforms remain serious obstacles to the advancement of economic freedom.

The most visible constraints on private-sector development are related to fiscal pressure, administrative complexities, and the lack of respect for contracts. Bureaucratic inefficiency and corruption affect much of the economy. Court enforcement of property rights remains vulnerable to political interference. The lack of economic freedom has fueled the growth of the informal sector, which accounts for about 60 percent of GDP.

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Background

President Patrice Talon, a wealthy businessman, was elected in a runoff vote in March 2016 to succeed Thomas Boni Yayi, who stepped down pursuant to the constitution’s two-term limit on the presidency. Talon ran as an independent and defeated Lionel Zinsou of the ruling Cowry Forces for an Emerging Benin party. One of Africa’s largest cotton producers, Benin nevertheless remains underdeveloped and dependent on subsistence agriculture and regional trade, particularly with Nigeria. In September 2015, the government signed its second Millennium Challenge Corporation compact for $375 million to increase power generation in a country where two-thirds of the population lacks access to electricity.

Rule of LawView Methodology

Property Rights 36.0 Create a Graph using this measurement

Government Integrity 31.3 Create a Graph using this measurement

Judicial Effectiveness 29.4 Create a Graph using this measurement

In 2016, the new government proposed reforms to increase state transparency and accountability and strengthen judicial independence. If they are adopted, a national Court of Accounts will be established to conduct thorough and independent reviews of public finances in the wake of a major embezzlement scandal in 2015. The courts are highly inefficient and susceptible to corruption, largely due to persistent lack of funding.

Government SizeView Methodology

The top income tax rate is 45 percent. The top corporate tax rate is 30 percent, with oil companies subject to a 45 percent rate. Other taxes include a value-added tax. The overall tax burden equals 14.8 percent of total domestic income. Government spending has amounted to 21.7 percent of total output (GDP) over the past three years, and budget deficits have averaged 4.0 percent of GDP. Public debt is equivalent to 37.5 percent of GDP.

Regulatory EfficiencyView Methodology

The overall entrepreneurial environment remains burdensome. Obtaining necessary business licenses is time-consuming and costly. Agriculture accounts for nearly 70 percent of the workforce, and outmoded employment regulations hinder overall job creation. The government subsidizes cotton production. Low-priced gasoline and diesel fuel are smuggled illegally from Nigeria and subsidized by the Nigerian government.

Open MarketsView Methodology

Trade is important to Benin’s economy; the value of exports and imports taken together equals 63 percent of GDP. The average applied tariff rate is 10.6 percent, and bureaucratic barriers to trade and investment have been reduced. Banking is highly concentrated and predominantly private, and foreign ownership is allowed. Despite the development of microfinance institutions, overall access to credit remains low.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius74.70.0
2Botswana70.1-1.0
3Rwanda67.64.5
4Côte d'Ivoire 633.0
5Namibia62.50.6
6South Africa62.30.4
7Seychelles61.8-0.4
8Swaziland61.11.4
9Uganda60.91.6
10Burkina Faso59.60.5
11Benin59.2-0.1
12Mali58.62.1
13Gabon58.6-0.4
14Tanzania58.60.1
15Madagascar57.4-3.7
16Nigeria57.1-0.4
17Cabo Verde56.9-9.6
18Democratic Republic of Congo56.410.0
19Ghana56.2-6.8
20Guinea-Bissau56.14.3
21Senegal55.9-2.2
22Comoros55.83.4
23Zambia55.8-3.0
24São Tomé and Príncipe 55.4-1.3
25Mauritania54.4-0.4
26Lesotho53.93.3
27Kenya53.5-4.0
28The Gambia53.4-3.7
29Togo53.2-0.4
30Burundi53.2-0.7
31Ethiopia52.71.2
32Sierra Leone52.60.3
33Malawi52.20.4
34Cameroon51.8-2.4
35Central African Republic51.86.6
36Niger50.8-3.5
37Mozambique 49.9-3.3
38Liberia49.1-3.1
39Chad492.7
40Sudan48.8N/A
41Angola48.5-0.4
42Guinea47.6-5.7
43Djibouti46.7-9.3
44Equatorial Guinea451.3
45Zimbabwe445.8
46Eritrea42.2-0.5
47Republic of Congo 40-2.8
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