Benin report - Institut Africain de la Gouvernance

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CHAPTER FIVE: CORPORATE GOVERNANCE__________________________________________________________________________representatives from the public and private sectors, with a broad decisionmakingmandate and who can grant the benefits requested in less than 15 days.Benin should draw on the Ivorian Investment Code – one of the most attractivein the West African region – to innovate and establish the necessary functionalmechanisms and tax incentives for sustaining the country‟s vision of becominga major hub for trade and business in the region.601. Access to land. One of the main factors making it difficult to obtain loans forinvestment is the lack of guarantees (especially land guarantees), as well aslegal insecurity in the relevant transactions. In fact, this problem is particularlyserious in Cotonou and the coastal region. It has worsened since 1997-1998when, following a Cabinet decision, the banks indicated that they would nolonger accept building permits authorised by customary law, or provisionalcertificates issued by the administration pending the registration of the plot ofland as mortgage security. Even though the Land Tenure Code is still awaitingpromulgation, the main difficulties stem, firstly, from divergences betweenmodern and customary land laws and, secondly, from administrative andjudicial red tape. Thus, because „traditional‟ sales are ignored but not formallyprohibited by law, a prospective buyer of land may receive objection theretofrom a former customary owner. Furthermore, a parcel of land duly registeredin the Urban Land Register is often claimed by several persons. According toseveral stakeholders, such conflicts take four to five years to be settled by thecourts, and it is not rare for a land dispute to take 15 to 20 years to be finallysettled.602. Furthermore, the European Development Fund report (2006) revealed that theregistration of a small plot of land in an urban area costs more than 1,200 euro,whereas per capita GDP in 2006 was 483 euro. In addition, the registrationprocedure could take up to two years. Consequently, only 1% of householdshave a land certificate for their land, while the majority of the rural populationcount on customary land law and only 10% of landed properties are registered.Another pernicious effect of this situation is that several local governmentsmobilise most of their staff to handle land issues, resulting in a waste ofenergy for these services. Also, users are required to go through numerousformalities and bear both official and informal costs.603. Besides costs associated with transactions and settlement of land disputes, theUNCTAD report on Benin‟s investment policy highlights other less visible butequally high costs. These include the sterilisation of a part of private savings 50and of public investments 51 . Lastly, land is also the cause of blockage ofprivate initiatives, inasmuch as it is not easy to quickly find land on which tocarry out a project.604. Corporate competitiveness, productivity and performance. The UNDPreport (2005) on assessment of the investment climate in Benin makes thefollowing observations on the productivity of enterprises in the formal sector:50 Owing to the fact that several households see their savings blocked in the form of a land purchase,and thus unusable for a very long time – pending clarification of their rights.51 Owing to the fact that some public utility networks provide services to many plots of land that areunused for a long time.210
CHAPTER FIVE: CORPORATE GOVERNANCE__________________________________________________________________________Labour productivity or the value added per worker is lower in Benin(2.481) than in Kenya, Mali, Senegal and South Africa.Total labour cost per physical unit of output (ratio of remuneration to valueadded in the sample firms) is higher in Benin, even though its labour costsare relatively lower.Capital intensity, estimated by the amount of capital per employee, ishigher in Benin (US$ 7.376) than in Mali, Tanzania, China and Uganda,but lower than in Kenya and Senegal (US$ 10.746 and US$ 10.856respectively).Capital productivity, estimated in terms of the value added per dollarinvested, is lower in Benin (where one dollar yields a value-add of 30cents) than in Kenya, Tanzania, Senegal, Uganda and Mali (35, 43, 58, 70and 77 cents respectively).The use of production capacity is about 60% (60.9% in Kenya, 71.1% inSenegal and 73.4% in Mali).The relatively small size of businesses and their lack of diversificationprevent them from reaping the benefits of economies of scale.The report concludes that firms in Benin have higher total factorproductivity than similar enterprises in most other countries of East Africa,except Kenya. However, this productivity is lower than that of Mali andSenegal.605. According to stakeholders, the low performance that characterises formalsector enterprises in Benin could be attributed to rigidities in the country‟sbusiness climate and to human resource management problems:Qualified supervisory staff are hard to come by.A high proportion of the workforce has received no appropriate vocationaltraining.Recruitments are often done on the basis of nepotism or by word of mouthwithin certain networks: available jobs are not really advertised, nor isthere any competition between candidates.Technical education, in the broad sense, is not well developed and only asmall proportion of enterprises in Benin – less than one-fifth according tothe UNDP – provide their employees with external training. These trainingsessions, which are financed by the firms, seem to only partially meet theexpectations of employees.Assistance for staff training is limited and sometimes linked to corruption.606. Furthermore, even buoyant enterprises are often made to conceal their realperformance for fear of being penalised by the tax regime. Consequently, there211
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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 FOUR: ECONOMIC GOVERNANCE A
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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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