2018 Index of Economic Freedom

Benin

overall score56.7
world rank120
Rule of Law

Property Rights35.5

Government Integrity30.2

Judicial Effectiveness31.3

Government Size

Government Spending85.6

Tax Burden67.4

Fiscal Health49.7

Regulatory Efficiency

Business Freedom60.7

Labor Freedom49.9

Monetary Freedom84.7

Open Markets

Trade Freedom55.6

Investment Freedom80.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 11.1 million
  • GDP (PPP):
    • $23.6 billion
    • 5.2% growth
    • 4.9% 5-year compound annual growth
    • $2,119 per capita
  • Unemployment:
    • 1.0%
  • Inflation (CPI):
    • -0.8%
  • FDI Inflow:
    • $160.6 million
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Benin’s economic freedom score is 56.7, making its economy the 120th freest in the 2018 Index. Its overall score has decreased by 2.5 points, with a plunge in scores for the fiscal health and trade freedom indicators overwhelming an improvement in business freedom. Benin is ranked 17th among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional average but below the world average.

According to the government, the 2017 budget was 41 percent higher than the 2016 budget in order to fund infrastructure upgrades. Fiscal receipts are expected to fall short due to the large size of the informal economy, red tape, and corruption, which continue to act as a brake on tax collection. Nor is the government likely to find international lenders and investors willing to fund the budgeted spending. Overall, entrepreneurs in Benin benefit from a relatively stable political and macroeconomic environment.

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Background

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 that limit to one six-year term. One of Africa’s largest cotton producers, the former French colony of Benin nevertheless remains underdeveloped and dependent on subsistence agriculture and regional trade. Government efforts to increase power generation capacity to help two-thirds of the population gain access to electricity should encourage 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 35.5 Create a Graph using this measurement

Government Integrity 30.2 Create a Graph using this measurement

Judicial Effectiveness 31.3 Create a Graph using this measurement

Secured interests in real and personal property are recognized and enforced, but property registration is difficult, and contract enforcement is very weak. Largely because of a persistent lack of funding, the courts are highly inefficient and susceptible to corruption. A 35-member commission appointed by President Talon has proposed institutional reforms aimed at reducing presidential influence on the judiciary.

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 18.3 percent of total domestic income. Over the past three years, government spending has amounted to 21.9 percent of total output (GDP), and budget deficits have averaged 5.3 percent of GDP. Public debt is equivalent to 50.3 percent of GDP.

Regulatory EfficiencyView Methodology

The overall business environment remains challenging, but regulatory improvements have made the process for starting a business easier each year since 2012. The size of the informal economy is estimated to be about 50 percent of GDP. The agricultural sector employs nearly 70 percent of the workforce. The government subsidizes cotton production, and the country benefits from illegally smuggled fuels subsidized by the Nigerian government.

Open MarketsView Methodology

Trade is significant for Benin’s economy; the combined value of exports and imports equals 70 percent of GDP. The average applied tariff rate is 17.2 percent. Nontariff barriers impede some trade. In general, government policies do not significantly impede foreign investment. The financial system remains underdeveloped. Banks have increased their domestic assets, and there are microfinance institutions, but overall access to credit remains limited.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius75.10.4
2Botswana69.9-0.2
3Rwanda69.11.5
4South Africa630.7
5Uganda621.1
6Côte d'Ivoire 62-1.0
7Seychelles61.6-0.2
8Burkina Faso600.4
9Cabo Verde603.1
10Tanzania59.91.3
11Namibia58.5-4.0
12Nigeria58.51.4
13Gabon58-0.6
14Mali57.6-1.0
15Guinea-Bissau56.90.8
16Madagascar56.8-0.6
17Benin56.7-2.5
18Comoros56.20.4
19Ghana56-0.2
20Swaziland55.9-5.2
21Senegal55.7-0.2
22Kenya54.71.2
23Zambia54.3-1.5
24Mauritania54-0.4
25Lesotho53.90.0
26São Tomé and Príncipe 53.6-1.8
27Ethiopia52.80.1
28The Gambia52.3-1.1
29Guinea52.24.6
30Democratic Republic of Congo52.1-4.3
31Malawi52-0.2
32Cameroon51.90.1
33Sierra Leone51.8-0.8
34Burundi50.9-2.3
35Liberia50.91.8
36Niger49.5-1.3
37Sudan49.40.6
38Chad49.30.3
39Central African Republic49.2-2.6
40Angola48.60.1
41Togo47.8-5.4
42Mozambique 46.3-3.6
43Djibouti45.1-1.6
44Zimbabwe440.0
45Equatorial Guinea42-3.0
46Eritrea41.7-0.5
47Republic of Congo 38.9-1.1
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