RESTRICTED
WORLD TRADE WT/TPR/G/27
11August 1997
ORGANIZATION(97-3370)
Original: French
TRADE POLICY REVIEW
BENIN
Report bytheGovernment
Pursuant totheAgreement establishing theTrade Policy Review Mechanism (Annex 3ofthe
Marrakesh Agreement Establishing theWorld Trade Organization), thepolicy statement ofthe
Government ofBenin isattached.
Note: Thisreport issubject torestricted circulation andpress embargo untiltheendofthemeeting
oftheTrade Policy Review Body onBenin.Republic ofBenin WT/TPR/G/27
Page iii
CONTENTS
Page
OVERVIEW 1
A. TRADE POLICY AND PRACTICE 2
(1) General trade policy objectives 2
(2) Sectoral trade policy objectives 2
(a) Agriculture 2
(b) Energy 3
(c) Industry 3
(d) Services 4
(3) General description oftheimport andexport regime 5
(a) Imports 5
(b) Exports 5
(4) Trade policy framework 5
(a) Laws andregulations governing theimplementation oftrade policy 5
(b) Formulation andreview oftrade policies 6
(c) Multilateral, bilateral andregional trade agreements 6
(5) Implementation oftrade policy 7
(a) Thetrade policy measures applied inBenin 7
(b) Current trade liberalization programme intheframework
oftheStructural Adjustment Programme 8
B. ECONOMIC REFORM PROGRAMME 8
CONCLUSION 10Republic ofBenin WT/TPR/G/27
Page 1
OVERVIEW
TheRepublic ofBenin covers anareaofabout 112,600 km2which isdivided, foradministrative
purposes, intosixprovinces (départements ),eachgoverned byaprefect (Atacora, Atlantique, Borgou,
Mono, Ouémé andZou). In1996, thepopulation ofBenin wasabout 5.4million, increasing atan
annual rateof3.1percent.
Annual percapita income isabout US$370, placing Benin among theworld 'sleastdeveloped
countries.
Inreviewing Benin 'seconomic situation, itisimportant tostress thatthetransition, in1990,
fromasingle-party regime toapluralist democracy marked theendoftwodecades ofplanned economy.
Theeconomic situation inBenin began todecline in1987, andfrom 1986 to1989 Benin
experienced, inrealterms, anegative GDPgrowth rate.In1990, Benin opted forapluralist democratic
regime andapolicy ofeconomic liberalization.
Development policies havefocused primarily onmacroeconomic stabilization through three
structural adjustment programmes under theauspices oftheInternational Monetary Fund (IMF) and
theWorld Bank.
Thanks totheadjustment policies, theeconomy hasachieved remarkable performances.
Benin 'sprincipal reforms havebeenintroduced intheframework ofitsSecond Structural
Adjustment Programme launched in1991withtheassistance oftheIMFandtheWorld Bank. Thanks
tothisprogramme, theoverall situation inBenin hasconsiderably improved andsubstantial progress
hasbeenachieved.
Indeed, theGDP hasgrown byanaverage of4percentinrealterms thanks tothecultivation
ofcotton. Public finances havebeenstabilized, andtheprimary balance reached 2.2percentofGDP
asof1992owing toasustained effort toincrease revenue, control spending, steadily reduce thebudget
deficit andraisetherateofgovernment investment. Domestic arrears werepractically cleared, and
thebanking system wasrebuilt.
Thepolicy ofreorganizing Benin 'spublic finances wasgiven anadded impetus in1994 with
themodification oftheCFA franc'sexternal parity aimed atstimulating theexport andtheimport
substitution sectors aswellasinvestment andcapital inflow.
In1996, intheframework oftheThird Structural Adjustment Programme, thenewGovernment
adopted amacroeconomic strategy consisting of:
- Ensuring sustained growth ofthenational economy;
- strengthening thecountry 'ssocial infrastructure; and
- improving thecountry 'spublic finances inorder toreduce thedebtburden andits
dependence ontheoutside world.
Inorder toattain these objectives, theGovernment setitselfthetaskofpromoting investment
anddomestic saving while redirecting itsresources towards thepriority sectors.WT/TPR/G/27 Trade Policy Review
Page 2
A. TRADE POLICY AND PRACTICE
(1) General trade policy objectives
ThenewGovernment formed inthewake ofthepresidential elections ofMarch 1996 plans
totakeeffective steps toconsolidate thefoundations ofBenin 'seconomic andsocial development.
On15May 1997, thePresident oftheRepublic andHead ofGovernment published the
Government 'splanofaction, reflecting apolicy aimed atcreating acompetitive andproductive economy
resting ontheprivate sector.
TheGovernment 'sgeneral objectives inthisrespect are:
- Toliberalize trade;
- tosupport theprivate sector through thedevelopment oftrade;
- tocontain theincrease intheprice ofmass consumption goods;
- topromote thedevelopment oftourism andhandicrafts; and
- topromote theprivate sector by:
- supporting existing enterprises andfacilitating thecreation anddevelopment
ofnewenterprises;
- streamlining theformalities involved insetting upenterprises;
- creating anindustrial freezoneinCotonou; and
- creating anopportunity centre.
(2) Sectoral trade policy objectives
(a) Agriculture
TheGovernment 'sagricultural policy focuses on:
- Promotion oflocalagricultural produce;
- strengthening offoodsafety;
- diversification ofagricultural production; and
- development ofagricultural exports.
Tothatend,theGovernment plans tomodernize anddevelop agriculture through measures
aimed at:
- Improving production methods toincrease output andreduce pressure ondomestic
prices;Republic ofBenin WT/TPR/G/27
Page 3
- Promoting localindustries, interaliabyorganizing "open days" forexisting industries
andcreating thenecessary structures forconsultation among theactors inthedifferent
subsectors: textiles, fruitandvegetables, cashew nuts,oilseeds, cassava andcement;
- ensuring thepermanent availability ofsufficient water resources forpasture farming
andfisheries. Tothatend,anumber ofmicro-dams andimpoundments areplanned;
- introducing systems forthefinancing ofagriculture through thecreation ofan
agricultural bankbacked byprivate partners;
- improving theperformance ofthedifferent agricultural subsectors through public and
private nursery production andsubsidization ofthepurchase ofselected seedlings;
and
- rehabilitation andextension oftheruralaccess roadnetwork through roadworks and
maintenance.
(b) Energy
Benin 'spolicy inthefieldofenergy reflects adetermination toachieve energy self-sufficiency
andtoelectrify theentire country atthelowest possible cost.
Tothatend,theGovernment plans to:
- Supply alloftheprovincial capitals withelectricity bybuilding thermal power stations,
linking them tothegridinterconnecting certain provincial capitals andurban centres
andelectrifying certain towns through solar energy;
- rehabilitate andextend theelectricity gridinthecities; and
- increase electricity generation capacity bybuilding theAdjarala dam, interconnecting
theNEPA (Nigeria) gridwiththeCEB(Benin-Togo) gridandconstructing agas-driven
thermal power station.
(c) Industry
TheGovernment 'sobjectives inthisareafocus onsupporting private initiative through measures
suchas:
- RevitalizationofcertainproductionunitsthroughtheprivatizationoftheSociétésucrière
deSavé, theBrasserie d'Abomey, theSociété desciments d'Onigbolo, andtheSociété
nationale d'industrie descorps gras(SONICOG);
- streamlining oftheformalities involved insetting upenterprises;
- creation ofserviced industrial zones inalloftheprovinces; and
- creation ofanindustrial feezoneinCotonou.WT/TPR/G/27 Trade Policy Review
Page 4
(d) Services
Thereorganization ofBeninese financial services isoneoftheprerequisites todevelopment
oftheprivate sector.
Thisiswhythemodernization ofthebanking sector isoneoftheGovernment 'spriorities.
Hence, therestructuring oftheBeninese banking sector atthebeginning of1990's.Since then, five
trade banks havebeenauthorized tosetup.These banks account for90percentofsavings inthe
formal sector, andareabletomeetdevelopment financing needs.
Inthetransport andcommunications sectors, theGovernment 'sobjective istoensure the
maintenance andrehabilitation ofinfrastructure andaccess toatransport andcommunications network.
Tothatend,theGovernment istaking measures to:
- Develop theroadnetwork byrestoring theearth andpaved roads andasphalting the
trunk roads, andbybuilding athirdbridge inthecityofCotonou;
- improve thecompetitiveness oftheautonomous portofCotonou bybuilding acontainer
terminal;
- modernize theairport facilities through therestoration ofthefreight andpassenger
terminals ofCotonou andthesecondary airfields;
- revitalize therailway network byrestoring railway lines, modernizing theequipment
oftheOrganisation commune Bénin-Niger deschemins defer(OCBN) andputting
thecoastal railway linesintoservice.
Inthetelecommunications sector, theobjective istoboost theefficiency ofthenational telephone
network andreduce telecommunication service costs forBeninese enterprises.
Promotion ofthetourist sector isoneoftheGovernment 'spriorities. Indeed, Benin hasa
number ofuntapped tourist attractions.
Accordingly, theGovernment plans totakemeasures aimed at:
- Developing tourist sitesandaccess roads inalloftheprovinces inorder tofacilitate
access andincrease thenumber ofvisitors inthebestpossible conditions;
- introducing apolicy ofprivate-sector construction anddevelopment oftourist andhotel
infrastructure.
Inthefieldofhandicrafts, government promotion activities aredirected towards:
- Thecreation ofchamber oftrade;
- thepreparation andintroduction ofacodeofhandicrafts;
- theimplementation ofapolicy ofencouraging theconstruction ofcraftvillages bythe
private sector;
- theorganization ofsalesexhibitions ofBeninese handicrafts abroad.Republic ofBenin WT/TPR/G/27
Page 5
(3) General description oftheimport andexport regime
Intheframework ofthetrade liberalization policy, legal orregulatory provisions thatwere
considered restrictive were themost parteliminated oramended.
(a) Imports
Import licences were eliminated intheframework oftheStructural Adjustment Programme
(Law No.90-005 of15May1990 andLawNo.93-007 of29March 1993) inaneffort topromote
economic liberalization.
However, theimport ofcertain products isprohibited forhealth reasons, forexample, rumps
ofturkey(InterministerialOrderNo.347/MCAT/MDRAC/MSP/CAB/DCE/DCIof24December1990).
Theimportation ofgoods thataredangerous tohuman health andStatesecurity issubject to
aspecial authorization.
(b) Exports
Beninese products merely require anauthorization from theDirectorate ofForeign Trade.
Only foodcrops aresubject toatemporary prohibition.
Thistemporary suspension wasmade necessary byashortage onthedomestic market following
abreakdown infoodself-sufficiency.
Inorder tomaintain thecountry 'snatural resources (flora), exportation ofteakintherough
isprohibited, andonlyprocessed wood maybeexported.
(4) Trade policy framework
(a) Laws andregulations governing theimplementation oftrade policy
TheConstitution isthesupreme lawoftheRepublic ofBenin. Legislative power isinthe
hands ofasingle national assembly.
TheNational Assembly votes thelaws, including financial lawssetting oftheGovernment 's
income andexpenditure targets.
ThePresident oftheRepublic hasthepower tonegotiate andconclude international agreements,
andmaydelegate thatpower toaminister oramember oftheExecutive. Where itisnecessary to
amend lawstomake them consistent withtheprovisions ofanagreement, theParliament must vote
alawauthorizing thatamendment.
Trade policy isapplied byseveral government institutions andexecutive bodies.
TheMinistry ofTrade, Handicrafts andTourism may, ifneedbe,submit draftlaws.
Thelawsrelating totrade cover several areas:
- Tourism;
- control ofgoods;WT/TPR/G/27 Trade Policy Review
Page 6
- competition;
- weights andmeasures;
- investment;
- banking andfinance;
- trade activities;
- privatization.
(b) Formulation andreview oftrade policies
TheMinistry ofTrade, Handicrafts andTourism isresponsible fordevising, implementing
andadministrating trade policy. Once drawn upbytheMinistry, lawsaresubmitted forexamination
andapproval bytheLegislature.
TheMinistry ofTrade, Handicrafts andTourism draws uptradepolicy measures inconsultation
withtheprivate sector (Chamber ofTrade andIndustry ofBenin) andtheother competent institutions
(Ministry ofFinance, Directorate-General ofDuties andIndirect Taxes), theMinistry ofPlanning,
Economic Restructuring andEmployment Promotion, theMinistry ofIndustry andSmall and
Medium-Sized Enterprises, etc.
(c) Multilateral, bilateral andregional trade agreements
Government policy inrespect ofmultilateral, regional andbilateral tradeagreements isdirected
towards thecreation ofafavourable environment fortheintegration ofBenin intotheinternational
economy withaviewtoensuring outlets foritsproducts andfostering thedevelopment ofitsindustries.
Thefollowing aresome oftheagreements concluded byBenin:
- Agreement Establishing theWorld Trade Organization (WTO);
- TheLomé Convention Between theACP andtheEU;
- TheECOWAS Treaty;
- TheWAEMU Treaty.
Benin isasignatory totheFourth Lomé Convention between theEuropean Union and71ACP
States. Under thisConvention, itsexports ofindustrial andagricultural products notcovered under
theCommonAgriculturalPolicy(PAC)enjoyduty-freeentry(non-reciprocal)totheCommunitymarket.
Having become afounding member ofGATT in1963Benin, uponauthorization bytheNational
Assembly (Decree No.95-241 of5September 1995), ratified theAgreement Establishing theWTO,
thusbecoming aMember ofthatOrganization on22February 1996.
Benin isconvinced thattheAgreement Establishing theWTO willserve theinterests ofthe
developing countries ingeneral andtheLDCs inparticular. However, thesecountries willneedgreater
assistance inorder tofullyprofit from thevarious WTO Agreements.Republic ofBenin WT/TPR/G/27
Page 7
Benin isamember oftheEconomic Community ofWest African States (ECOWAS) andhas
espoused theideaofcreating aregional common market, asingle currency andacustoms union within
theWest African Economic andMonetary Union (WAEMU).
(5) Implementation oftrade policy
(a) Thetrade policy measures applied inBenin are:
- Customs duties
Since 1989, Benin hasbeenfirmly committed tothepathofeconomic liberalization which
led,in1991, toamajor tariffreform. Thisreform involved thestreamlining ofthenumerous existing
levies intofourgroups:
- Customs duty: 5percent(suspended);
- Community solidarity levy(PCS): 1percent;
- Fiscal import duty: 0percent, 5percent,10percent, 15percentand20percent;
- Value-Added Tax(VAT): 18percent.
Asindicated above, there arefiveratesoffiscal dutyaccording tothetariff class.
Thedocuments required forcustoms transactions aretheimporter 'scard; thepurchase invoice;
theinvoice showing theinsurance premium; thecertificate oforigin; thecustoms valuation certificate;
and,where applicable, thephytosanitary certificate.
- Customs valuation andpreshipment inspection
Customs valuation iscurrently based onthetransaction value ofthegoods. Theprinciples
governing customs valuation inBenin arebased onArticles 24,25,27and28oftheCustoms Code.
Acompulsory preshipment inspection system hasbeeninforce since 1991. Allimports of
goods must comply withtheformalities oftheinspection company which consist of:
- Preparing animport application forallinvoices exceeding CFAF 3million (bysea);
- having thegoods controlled prior toshipping;
- producing thefinalinvoice afterinspection;
- obtaining acustoms valuation certificate which must besubmitted tothecustoms
authorities during customs clearance.
Incases ofundervaluation, theinspection company rejects thevalues appearing ontheinvoice
andmakes thenecessary adjustments onthebasisoftheinformation available intheimporting country
ortaking account ofthevalue oflikeproducts, mentioning suchadjustments onthecustoms valuation
certificate.WT/TPR/G/27 Trade Policy Review
Page 8
(b) Current trade liberalization programme intheframework oftheStructural Adjustment
Programme
From 1975to1989, Benin 'seconomy washeavily regulated under aneconomic strategy which
relied onthepublic sector forinvestment andgrowth. Theresults didnotliveuptoexpectations.
In1989, Benin launched aneconomic liberalization programme withthesupport oftheInternational
Monetary Fund andtheWorld Bank.
Indoing so,theGovernment 'sobjective wastocreate anenvironment favourable tothe
development ofprivate initiative. Tothatend,thefollowing measures were taken:
- Elimination ofimport licensing andimport andexport restrictions;
- adaptation ofBenin 'slaws andregulations tothenew, highly liberal economic
environment.
B. ECONOMIC REFORM PROGRAMME
Trade policy isbutoneelement ofabroader policy covering investment, tourism, transport,
financial services, etc.
Alloftheseelements arelinked, intheirturn,tothemainfeatures ofaneconomic policy which
aimstoguarantee prosperity foralloftheBeninese people andsustained economic growth.
During the1980s, Benin underwent aserious economic crisis, andstarting in1989, withthe
helpoftheInternational Monetary Fund andtheWorld Bank, ithadtointroduce astructural adjustment
programme aimed atstabilizing theeconomy, reversing thedecline instandard ofliving, achieving
sustainable growth andimproving theexternal payments position.
Onthemacroeconomic side,theGovernment adopted astrategy fortheperiod from 1996 to
1999, consisting of:
- Ensuring sustained growth ofthenational economy;
- strengthening thecountry 'ssocial infrastructure; and
- improving thecountry 'spublic finances inorder toreduce thedebtburden andits
dependence ontheoutside world.
Inconnection withthisstrategy, ithassetitself thefollowing goals:
- Toensure average GDP growth rateof6percent;
- tomaintain inflation atalevelofabout 3to4percentperyear;
- toreduce thecurrent external deficit (excluding grants) to5.5percentby1999.
Thisexternaldebtreductionistobeachievedbydiversifyingexportsandensuringthesatisfactory
performance ofthecotton sector.
Inorder toattain these goals, theGovernment hassetitself thetaskofpromoting domestic
investment andsaving while redirecting resources towards thepriority sectors.Republic ofBenin WT/TPR/G/27
Page 9
Inthisrespect, itaimstoraisetheaverage rateofgovernment investment toabout 7.8per
cent.
Tofinance theincreased investment without negatively affecting thebalance ofpayments, the
domestic savings ratewillhavetoincrease from 9percentofGDP in1995 toapproximately 13per
centin1999.
Thus, budgetary policy willbedirected towards agradual increase inpublic savings, inspite
ofthedecrease inexternal transfers.
Thispolicy should make itpossible toimprove thecurrent account balance, which should go
from 8.6percentofGDP in1995 to5.5percentofGDP in1999.
Thevolume ofexports, notincluding re-exports, should increase by9.6percentfrom1997
to1999, while re-exports should continue togrowandimports notintended forre-export should increase
byapproximately 6.5percentinrealterms during thesame period.
Withrespect more specifically tothedevelopment oftheprivate sector andthediversification
ofeconomic activity, theGovernment hasopted for:
- Promotion ofnon-traditional exports andthereduction intransports costs;
- creation ofasingle window forinvestors andthepromotion ofanindustrial freezone;
- improvement ofthefiscal andlegalclimate andthestrengthening ofthejudicial system.WT/TPR/G/27 Trade Policy Review
Page 10
CONCLUSION
Ascanbeseenfrom thistrade policy review, Benin isrelentlessly pursuing itseconomic
liberalization programme. Inaccordance withthatprogramme, andwithaview tocreating an
institutional environment more favourable tothedevelopment ofbusiness, acertain number ofreforms
arecurrently under way,including therevision oftheLabour Code, theMining Code, theCommercial
Code, theCivil Procedures Code andtheAdministrative Code.
Theintroduction ofacentre forbusiness formalities (single window) aimed atbringing the
public sector closer totheprivate sector ispractically areality.
Thesimplification ofadministrative procedures, theimprovement oftheInstitutional Code
andtheadaptation ofBeninese lawsandregulations tothenew,highly liberal economic environment
allfocus onthesame target: thecreation ofanenvironment inwhich aliberal economy canflourish.
Thepropermanagementofaliberaleconomycallsforthestrengtheningofdemocracy,improved
governance andfurther structural reform.