2019 Index of Economic Freedom

Benin

overall score55.3
world rank127
Rule of Law

Property Rights37.2

Government Integrity28.1

Judicial Effectiveness32.8

Government Size

Government Spending83.4

Tax Burden69.3

Fiscal Health27.9

Regulatory Efficiency

Business Freedom62.4

Labor Freedom53.8

Monetary Freedom86.4

Open Markets

Trade Freedom61.8

Investment Freedom70.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 11.1 million
  • GDP (PPP):
    • $25.3 billion
    • 5.6% growth
    • 5.0% 5-year compound annual growth
    • $2,277 per capita
  • Unemployment:
    • 2.5%
  • Inflation (CPI):
    • 0.1%
  • FDI Inflow:
    • $184.4 million

Benin’s economic freedom score is 55.3, making its economy the 127th freest in the 2019 Index. Its overall score has decreased by 1.4 points, with improvements in trade freedom and labor freedom overwhelmed by a plunge in fiscal health and lower scores for investment freedom, government integrity, and government spending. Benin is ranked 21st among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional average but below the world average.

The government’s structural reforms are aimed at reducing corruption and bureaucratic inefficiency and improving governance by pushing for legislative changes to strengthen political checks and balances. The program is also intended to reduce administrative expenses and strengthen Benin’s public finances and debt management. Higher public spending has funded infrastructure upgrades, which should produce higher GDP growth. Overall, entrepreneurs in Benin benefit from a relatively stable political and macroeconomic environment.

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Background

One of Africa’s largest cotton producers, the former French colony of Benin nevertheless remains underdeveloped and dependent on subsistence agriculture and regional trade. Wealthy businessman and political novice Patrice Talon was elected to a five-year presidential term in 2016 on a clean-government platform. His predecessor, Thomas Boni Yayi, was constitutionally limited to two terms. In April 2017, Talon tried unsuccessfully to change the limit to one six-year term. Government efforts to increase power generation capacity to help two-thirds of the population gain access to electricity should stimulate economic growth. Ongoing expansion of the privately managed port of Cotonou, which accounts for approximately 60 percent of GDP, will further encourage growth by increasing port services to Nigeria, Niger, and Burkina Faso.

Rule of LawView Methodology

Property Rights 37.2 Create a Graph using this measurement

Government Integrity 28.1 Create a Graph using this measurement

Judicial Effectiveness 32.8 Create a Graph using this measurement

Property rights are recognized and enforced. Property registration procedures were streamlined in 2018. The judiciary remains inefficient, underfunded, and susceptible to corruption, but the government has proposed reforms to increase transparency and accountability and to strengthen the independence of the courts. A Court of Accounts is to be established to review public finances in the wake of a major embezzlement scandal.

Government SizeView Methodology

The top income tax rate is 45 percent, and the top corporate tax rate is 30 percent (45 percent for oil companies). Other taxes include a value-added tax. The overall tax burden equals 11.9 percent of total domestic income. Over the past three years, government spending has amounted to 23.5 percent of the country’s output (GDP), and budget deficits have averaged 6.4 percent of GDP. Public debt is equivalent to 54.6 percent of GDP.

Regulatory EfficiencyView Methodology

The overall entrepreneurial environment remains burdensome. Obtaining necessary business licenses is time-consuming and costly. Outmoded employment regulations hinder overall job creation. The government has stopped subsidizing the cotton sector, citing a lack of transparency, but Benin continues to benefit from smuggled and heavily subsidized gasoline and rice from neighboring Nigeria.

Open MarketsView Methodology

The combined value of exports and imports is equal to 79.4 percent of GDP. The average applied tariff rate is 11.6 percent. As of June 30, 2018, according to the WTO, Benin had one nontariff measure in force. Bureaucratic barriers hinder investment. Despite the development of microfinance institutions, overall access to credit remains low. About 41 percent of adult Beninese have access to an account with a formal banking institution.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius73-2.1
2Rwanda71.12.0
3Botswana69.5-0.4
4Cabo Verde63.13.1
5Côte d'Ivoire 62.40.4
6Seychelles61.4-0.2
7Tanzania60.20.3
8Uganda59.7-2.3
9Burkina Faso59.4-0.6
10Namibia58.70.2
11South Africa58.3-4.7
12Mali58.10.5
13Ghana57.51.5
14Nigeria57.3-1.2
15Madagascar56.6-0.2
16Senegal56.30.6
17Gabon56.3-1.7
18Mauritania55.71.7
19Guinea55.73.5
20Comoros55.4-0.8
21Benin55.3-1.4
22Kenya55.10.4
23Eswatini54.7-1.2
24São Tomé and Príncipe 540.4
25Guinea-Bissau54-2.9
26Ethiopia53.60.8
27Zambia53.6-0.7
28Lesotho53.1-0.8
29Cameroon52.40.5
30The Gambia52.40.1
31Niger51.62.1
32Malawi51.4-0.6
33Angola50.62.0
34Democratic Republic of Congo50.3-1.8
35Togo50.32.5
36Chad49.90.6
37Liberia49.7-1.2
38Central African Republic49.1-0.1
39Burundi48.9-2.0
40Mozambique 48.62.3
41Sudan47.7-1.7
42Sierra Leone47.5-4.3
43Djibouti47.12.0
44Equatorial Guinea41-1.0
45Zimbabwe40.4-3.6
46Republic of Congo 39.70.8
47Eritrea38.9-2.8
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