Benin report - Institut Africain de la Gouvernance

CHAPTER TWO: HISTORICAL CONTEXT AND CURRENT CHALLENGES__________________________________________________________________________Industrie Dahoméenne des Textiles (IDATEX); Industrie Cotonnière duDahomey, which later became Société Dahoméenne des Textiles (SODATEX);and Société des Ciments du Dahomey (SCD).80. These initiatives – which were subject to the willingness of the authorities ofthe new independent state to take over after the colonial period – werecompleted by private industries, particularly in the sectors of soap production,the manufacture of metal structures, the assembly of Citroën vehicles, theproduction of pasta, the assembly of bicycles and motorcycles, and themanufacture of Bata shoes. Despite these initiatives, the private industries hadlittle weight in the economy of this period.81. Significant industrial investments were made between 1972 and 1989. Therewas a move towards nationalisation and the creation of state-owned andmixed-economy enterprises. Accumulated investments totalled 17.5 billionCFA franc in 1979, a figure never attained before. The country benefited mostfrom these investments in 1974 and 1975. The industrial fabric was never asdense as during this period and comprised more than 20 production plants ofall kinds. Nevertheless, the country was severely affected by economic crisisand drought, which led its leaders to declare Benin a „disaster country‟ inJanuary 1984 and to solicit international aid as a matter of urgency.82. During the 1990s, Benin recorded satisfactory macroeconomic results with anannual growth rate of around 5% and a contained rate of inflation. Indeed, theaverage growth recorded during the 1991-1996 period was 4.1%, and 5.2%was recorded for the period 1997 to 2001 5 . However, after 2001, the pillars ofthe economy of Benin showed signs of weakness. This slowed economicactivity between 2003 and 2004.83. Extremely dependent on trade with Nigeria, the Beninese economy wasparticularly vulnerable to the decisions taken by its neighbour to tightenrestrictions on imports after the end of 2003: the actual growth rate of theeconomy continued to decline and reached 3.4% in 2004, compared to 3.9% in2003 6 . With the population growing at a rate of 3.1%, poverty reduction canonly be very slow.84. The economic slowdown may be attributed to both economic and structuralfactors. Indeed, 2004 was characterised by a difficult regional andinternational environment. The most notable of these difficulties were themaintenance of trade restrictions imposed by Nigeria on the re-exportation ofgoods from Benin, and unfavourable oil and cotton prices. This vulnerabilityof the Beninese economy to external shocks also resulted from the delay inimplementing the structural reforms initiated in the 1990s 4 .5 INSAE. National Accounts.6 OCDE: Perspectives économiques en Afrique 2005/2006 – Etudes par pays: Bénin [OECD(Organisation for Economic Co-operation and Development): Economic prospects in Africa 2005/2006– Country Studies: Benin]54