Benin report - Institut Africain de la Gouvernance

CHAPTER FOUR: ECONOMIC GOVERNANCE AND MANAGEMENT__________________________________________________________________________and ratified most of the standards and conventions indicated in the APRMquestionnaire. However, the CSAR remained silent on the adherence,ratification and implementation of the Inter-African Conference on InsuranceMarkets (CIMA) code for insurance in African countries in the franc zone.499. The CSAR does not mention Benin‟s performance on multilateral surveillanceand, more particularly, the convergence criteria aimed at harmonising nationaleconomic systems. However, additional readings by the CRM showed that,since 1999, Benin‟s performance in terms of compliance with the primaryconvergence criteria in WAEMU is noteworthy. This is shown in Box 4.5below. However, this performance is not as good for the secondaryconvergence criteria. Between 1999 and 2005, the criteria relating to „wagebill/tax revenue‟ and „tax revenue/GDP‟ ratios were rarely consistent withestablished standards. The expansion of the informal sector, as well as tax andcustoms evasion as a result of corruption, could account for the chronicnoncompliance with these two criteria.500. As far as successes are concerned, special mention should be made of thesuccesses achieved by private investors (including Beninese nationals) throughthe creation of Ecobank, a private banking institution established in 18 Westand Central African countries. It intends to extend its activities as far as Eastand Southern Africa. It has a network of 320 agencies dispersed in the membercountries. Ecobank is an example of the success of private regionalcooperation for the promotion of transnational investments and regionalintegration on the continent.501. At another level, it is useful also to consider the implementation of theWAEMU CET, which Benin enforced in 2000. Discussions with stakeholdersrevealed that Benin continues to adapt some national taxes to the CETcommunity plan, which is a deviation from the texts governing imports withinWAEMU. This deviation makes imports more expensive in Benin than in theother member countries.502. With regard to the tax system, the CRM noted that the tax pressure on thecorporate sector in Benin is about the average of taxes in WAEMU, but highin comparison to the country‟s level of development. In particular, VAT andcorporate tax penalise the private sector excessively and make Benin‟seconomy into one that is characterised by a high level of underground activity.503. On the other hand, the community legislation (Law 2/2002/7CM/UEMOA) onanti-competition practices, adopted by WAEMU in 2002, is not yet in force inBenin. A competition consultative committee was set up in May 2002 toimplement this community regulation. However, this structure seems to lackexpertise, independence and financial resources. To date, it has not yet madeany decision on violations of the competition legislation.177