2013 Index of Economic Freedom

Benin

overall score57.6
world rank101
Rule of Law

Property Rights30.0

Freedom From Corruption30.0

Limited Government

Government Spending86.1

Fiscal Freedom76.1

Regulatory Efficiency

Business Freedom45.4

Labor Freedom49.7

Monetary Freedom79.9

Open Markets

Trade Freedom59.3

Investment Freedom70.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 9.9 million
  • GDP (PPP):
    • $14.7 billion
    • 3.1% growth
    • 3.6% 5-year compound annual growth
    • $1,481 per capita
  • Unemployment:
  • Inflation (CPI):
    • 2.7%
  • FDI Inflow:
    • $118.5 million
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Benin’s economic freedom score is 57.6, making its economy the 101st freest in the 2013 Index. Its overall score is 1.9 points better than last year due to notable improvements in half of the 10 economic freedoms, including investment freedom, government spending, and business freedom. Benin is ranked 15th out of 46 countries in the Sub-Saharan Africa region, and its overall score is higher than the regional average.

Consistent macroeconomic management and relative political stability have created an environment enabling Benin to achieve average annual economic growth of over 3 percent during the past five years. However, such economic expansion remains fragile in the absence of a dynamic private sector. Though some previously government-owned enterprises have been privatized, direct government involvement in economic activity continues to crowd out private-sector development, and corruption remains a serious problem. Enforcement of contracts can be difficult.

Benin lags in competitiveness and still lacks the broad-based economic activity that is critical to the reduction of poverty. The poor quality of physical and legal infrastructure, exacerbated by the government’s inefficiency in delivering public goods, is a serious impediment to long-term economic development. Imports of electricity from Ghana have a significant impact on the balance of payments.

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Background

President Mathieu Kérékou, who ruled Benin for almost 20 years following a military coup, stepped down following a democratic transition in the early 1990s and later served two five-year elected terms. Current President Boni Yayi, former head of the West African Development Bank, was elected in a runoff election in 2006 and re-elected for another five-year term in 2011. In January 2012, Yayi was elected chairman of the African Union. Piracy is increasing off the coast, with reports of 20 incidents of oil tanker hijacking in 2011. Benin remains underdeveloped and dependent on subsistence agriculture. Cotton, the main commercial crop, accounts for over 40 percent of foreign exchange earnings, 17 percent of exports, and about 7 percent of GDP.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 30.0 Create a Graph using this measurement

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.

Limited GovernmentView Methodology

The top income tax rate is 35 percent, and the top corporate tax rate is 30 percent, with oil companies subject to a 45 percent rate. Other taxes include a value-added tax (VAT). The overall tax burden amounts to 16.2 percent of GDP. Government expenditures have fallen to 21.6 percent of GDP, but deficits have risen. Public debt is equivalent to around 30 percent of GDP. Fiscal health remains vulnerable due to heavy dependence on commodity exports.

Regulatory EfficiencyView Methodology

The cost of starting a business is now slightly above the level of average annual income, but obtaining necessary business licenses is still time-consuming. The labor market remains underdeveloped. Inflation has increased, largely because of chaos in the fuel market. Much of the fuel sold in Benin is smuggled illegally from Nigeria, and Nigeria’s decision to end domestic subsidies on oil products has caused a sharp rise in fuel prices in Benin as well.

Open MarketsView Methodology

Benin is a member of the West African Economic and Monetary Union, 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.

Country's Score Over Time

Bar Graph of Benin Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Benin to other economic country groups

Regional Ranking

rank country overall change
1Mauritius76.9-0.1
2Botswana70.61.0
3Rwanda64.1-0.8
4Cape Verde63.70.2
5Madagascar62-0.4
6South Africa61.8-0.9
7Ghana61.30.6
8Uganda61.1-0.8
9Namibia60.3-1.6
10Burkina Faso59.9-0.7
11The Gambia58.80.0
12Zambia58.70.4
13Tanzania57.90.9
14Gabon57.81.4
15Benin57.61.9
16Swaziland57.20.0
17Mali56.40.6
18Kenya55.9-1.6
19Senegal55.50.1
20Malawi55.3-1.1
21Nigeria55.1-1.2
22Mozambique 55-2.1
23Seychelles54.91.9
24Côte d'Ivoire 54.1-0.2
25Djibouti53.90.0
26Niger53.9-0.4
27Cameroon52.30.5
28Mauritania52.3-0.7
29Guinea51.20.4
30Guinea-Bissau51.11.0
31Central African Republic50.40.1
32Ethiopia49.4-2.6
33Liberia49.30.7
34Burundi490.9
35Togo48.80.5
36Sierra Leone48.3-0.8
37São Tomé and Príncipe 48-2.2
38Lesotho47.91.3
39Comoros47.51.8
40Angola47.30.6
41Chad45.20.4
42Republic of Congo 43.5-0.3
43Equatorial Guinea42.3-0.5
44Democratic Republic of Congo39.6-1.5
45Eritrea36.30.1
46Zimbabwe28.62.3
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