Benin report - Institut Africain de la Gouvernance

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CHAPTER FOUR: ECONOMIC GOVERNANCE AND MANAGEMENT__________________________________________________________________________Box 4.1: The cotton sectorBenin‟s economy is highly dependent on cotton as it contributes about 40% to the country‟sexports and about 90% to agricultural revenue. During the past 10 years, production hashovered around 334,000 tons, while the 2004-2005 farming season had a record productionof 427,000 tons. The lowest production, of 191,000 tons, was recorded in 2006-2007.The cotton sector is managed by three private associations. These are the AIC, theAssociation Professionnelle des Egreneurs du Bénin (APEB), and the GroupementProfessionnel des Distributeurs d’Intrants Agricoles (GPDIA). The partnership between thesethree associations was often marred by inter-association conflicts and financial scandals – tothe extent that the state had recently to intervene in order to compensate many cottonproducers and to settle financial claims between the partners, leading to considerable sums ofmoney being disbursed.The government aims to increase production in the next two years to 320,000 tons and500,000 tons respectively and, in the medium term, to increase the rate of cotton processingfrom 3% to 30% by rehabilitating textile factories.Benin was commended for the excellent quality of its cotton fibre, estimated respectively at98.17% of production in 2005-2006, and 97.91% in 2006-2007 27 . Private sector activities atvarious levels and support from some TFPs (including the World Bank, the FrenchDevelopment Agency (AFD) and the European Union) account for the increases in theproportions of income for producers from 2% to 25%.However, the world cotton market is crippled by the fact that the industry is heavily subsidisedby major producers from industrialised and emerging countries and, in the case of Benin,through the smuggling of materials from neighbouring countries and those further away. Thisis weakening the cotton processing industries established in the country. The CRM thinks thatobstacles to the survival of the cotton sector in Benin can only be eliminated through thecreation of a predominantly private subregional partnership (which focuses on the creation ofa regional cotton stock market) and the introduction of a special tax on cotton applicable to allthe countries concerned.387. The government has, in its new GPRS for the 2007-2009 period, defined abaseline scenario. This is a costed reflection of the various sectoral strategiesto be implemented in order to accelerate growth and reduce poverty duringthis period, while maintaining macroeconomic stability (in levels of inflationand in targeted and sustainable deficits). In these strategies, growth will beaccelerated by diversifying production, by reinforcing economic and socialinfrastructures, and by strengthening good governance.388. Although the CSAR has not stated this, it should be noted that, with regard toliberalisation, the government has adopted a more attractive investment codeand has tried to improve the business environment. However, these measureshave not attracted significant direct foreign investment, mainly because ofconstraints relating to the legal and judicial framework and administrativebarriers to private investment.389. Situation of public finance. It should be noted that the performance of thetaxation services has suffered over the past five years from an upsurge in fraud27 Strategic development orientations of Benin for 2006-2011, Emerging Benin.142
CHAPTER FOUR: ECONOMIC GOVERNANCE AND MANAGEMENT__________________________________________________________________________through the under-evaluation of imports and the abusive granting ofexemptions, and from the slowdown in economic activities following therestriction of re-exports to Nigeria. In order to increase tax revenue, thegovernment is implementing an extensive programme to collect revenue andbroaden the tax base.390. External sector. The two main factors that weakened the country‟s externalposition in the period from 2000 to 2005 were the decline in cotton productionand unfavourable trends in cotton prices. Furthermore, the rise of the euroagainst the US dollar favoured the over-valuation of the CFA franc, therebyreducing the competitiveness of Benin‟s cotton. These difficulties werecompounded by increases in oil prices and a decline in public transfers fromre-export operations. Consequently, the current account deficit (excludinggrants) stood at 7.2% of GDP in 2004. The deficit improved slightly to 6.4%of GDP in 2005 as a result of improvements in the balance of payments.143
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Finally, the APR Panel would like t
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of democracy, tolerance and fair pl
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COUNTRY FACT SHEETLocation:West Afr
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SOME ECONOMIC AND FINANCIAL INDICAT
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Prospects for economic growth in me
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CSARCSRDCREDEPOLIPODFIDGIDDIVIDNMPE
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SONAPRASONEBSPTSTASTAGSTARSYSCOASYS
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EXECUTIVE SUMMARY__________________
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CHAPTER ONE: INTRODUCTION: THE APRM
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CHAPTER TWO: HISTORICAL CONTEXT AND
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CHAPTER THREE: DEMOCRACY AND POLITI
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CHAPTER FIVE: CORPORATE GOVERNANCE_
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CHAPTER SIX: SOCIOECONOMIC DEVELOPM
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CHAPTER SEVEN: CROSSCUTTING ISSUES_
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CHAPTER EIGHT: GENERAL CONCLUSIONS:
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CHAPTER EIGHT: GENERAL CONCLUSIONS:
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APPENDIX I: PROGRAMME OF ACTION OF
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APPENDIX II: BENINESE GOVERNMENT CO
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APPENDIX III: REPORT ON THE PEER RE
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Benin report - Institut Africain de la Gouvernance

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