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Benin Economy

27 January 2010
Benin Home Page
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Like other African countries,Benin's economic situation has a situation strongly affected by debts over the years against the international community, combined with a weak productive capacity that the country exposed to frequent crises.

In the recent decades several government programs have been prepared ,designed to modernize and rationalize the resources that are mainly based on a type of subsistence agriculture.

The economy of Benin is highly undeveloped and essentially depends on the agricultural sector, on cotton production and trade.

Agriculture accounts for  the 65% of the workforce: in the North it is practiced by primitive methods, into the south  it is rather hampered by the presence of marshy land, however,it is the main source of income contributing 38% of GDP.

The main products are: corn, sorghum, products derived from palm oil, cassava, peanuts, cotton, rice, beans.

The most widespread crop is the coconut palm which is growing in a semispontaneous manner and assumes the role of monoculture in the south.

The mineral resource is modest and the only resource used is the oil that, since 1982, contributes significantly to national income.

In order to improve their conditions, Benin should be able to attract more foreign investment, to boost tourism,to modernize agricultural production also introducing processes for food preservation,to encourage the introduction and use of new technologies.

Regarding the industrial sector, the most important industries are those of textile, petroleum, foodstuffs, building materials, cigarettes.

The port of Cotonou as a transit point to other countries affairs, especially Nigeria, is certainly a strong point for the country from economic point of view even if the activities of trade and transport are sensitive of the availability of oil in Nigeria.

In recent years, the Paris Club and bilateral creditors have eased the external debt of Benin.

Growth in real output has had, over the last six years, an average of 5%, but the rapid population growth has made it useless much of this growth.

Inflation was kept under control in recent years.

In order to increase the rate of economic growth, Benin is trying to attract more foreign investments, to put more emphasis on tourism, to facilitate the development of new systems for food processing and production of new agricultural products and to encourage new information technologies and telecommunications.

The program of 2001 about privatization in telecommunications, drinking water, electricity and agriculture is still under implementation, despite the initial reluctance of the government.

The Paris Club and bilateral agreements with creditor countries have lightened the situation of foreign debt, combined with the acceleration of structural economic reforms.

In a development perspective, to promote industrial production and exports ,in Benin was established in 2005 an industrial free zone (The ZFI), which is located 20 km from the port and the international airport.

The objectives are: promotion, improvement of trade balance, service development and creating jobs.

Furthermore, the code value of investment together with tax exemption and customs helps to give privilege to this area from the point of investment.

A task created in this area has the objective of contributing to socio-economic development of the locality and the country according to the rules prescribed by the government.


Major investment opportunities consist of the ability to carry out projects for the farming and food processing.

Food products are sold both domestically and externally to the ECOWAS, the United States and Europe '.

In the longer term the aim is to focus attention on tourism because of the beautiful coast of Benin, magnificent national parks, the rich wildlife and the many historic sites.

Under the procedures required by law a foreigner who wishes to establish a company in the country, can install a limited company (SA) or a limited liability company (ARL).

The companies concerned may create its own or in collaboration with other people.

No obligation of joining a citizen of Benin in its constitution is present.

Foreign companies and the Beninese ones are subject to the same rules.

A company installed in Benin which wants to import a product from abroad, must request an invoice to a foreign company which will be called for verification by a local monitoring company that has signed the agreement with the state of Benin, called BIVAC.

This company has the power to control the product including the price before proceeding with customs practices of the commodity.


The industry participates minimally to the formation of national income and is deficient in the basics.There is the presence of breweries, sugar refineries, cement works, textile and other companies engaged in the fertilizer industry and motor vehicles.


Mineral wealth is modest and the only resource exploitation is the oil which , since 1982, contributes significantly to national income. The deposits are submarines and localized in the Semé.


The main growth sectors are tourism, manufacturing and food processing, production of new agricultural products and the sector of telecommunications and new technologies.


The current investment code defines the conditions necessary to obtain the benefits under the investment schemes and gives to the Board of Supervision of investment set up by the Ministry of Industry, a broad discretion.

The investment code of 1990 was enacted to establish a simplified system easily accessible to all investors.

In recent years, the government has established an office "processing" ( "Guichet Unique" or one-stop-shop) at the Ministry of Commerce to help investors especially foreigners.

Most foreign investment recorded today are about the acquisition of participations in private companies.

Benin has laws, regulations and penalties to combat corruption.


The tax rate for companies is 38% and 58% for oil and mining companies.

Among the companies exempted from income tax are included agricultural credit cooperatives and mutuals.

Capital gains are exempt from tax for reinvestment within 3 years.

Indirect taxes provide almost 60% of government revenues and direct taxes about 25%.

The rate of corporation tax has been reduced to 35% from 38%.

The top marginal rate for personal income  also has been reduced from 60% to 35%.

VAT with a standard rate of 18% was introduced in 1991.


Benin signed a bilateral agreement with France.

Moreover, for the protection of investment Benin signed several agreements with European countries including:

  • October 10, 1993, with Germany, an agreement on mutual encouragement and protection of investment capital.
  • November 27, 1987, with Great Britain for the protection of British investment in Benin.

Further multilateral agreements on investment protection, are: the International Convention for the Settlement of Investment Disputes and the Security Agency.

Benin is member of the  ECOWAS (Economic Community of West African States) and of  the Economic Community of West African States (composed by 16 countries).


The customs duty is 0.5, 10, 15 or 20% of value.

Products from the UMEOA countries are exempt from customs duties although they are subject to tax and other taxes specific taxes, while products from the EU and the countries of the zone may be exempt from customs duties.

Instead, petroleum products and other food products are subject to a reduced fee.

There are also some special provisions for pharmaceuticals, education and public,with the aim  of  reducing the tax burden.


The legal system in Benin, protects and facilitates acquisition and disposition of all property rights, including land, buildings and mortgages.

The government respects the intellectual property rights.



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