Robust economic growth, significant government investment – the World Bank and the International Monetary Fund certify Benin’s sound fiscal policy. The government knows how to skilfully manage public income and expenditures and hence to promote economic development. Benin ranks third in West Africa, behind Rwanda and Senegal, in the World Bank’s government effectiveness index. The government has been pursuing an ambitious development and reform agenda since 2016, and this has been successful. The World Bank has classified Benin as a lower-middle-income country since 2020.
Poverty is nevertheless widespread. The poverty gap runs between urban centres and the countryside, and from south to north. The effects of the coronavirus pandemic and the Ukraine conflict are exacerbating the situation further still. The economy is largely undiversified. It is dependent on exports of cotton and transit trade with Nigeria, as well as on the port of Cotonou, which is extremely important for the country’s economy. The key challenges lie in overcoming poverty and achieving economic growth in which everyone holds a stake. Here, it is particularly important to drive forward economic transformation through digitalisation, to invest in economic and social infrastructure, to train specialists and to promote good governance.
To meet these challenges, KfW Development Bank, on behalf of the German Federal Government, supports Benin in the following three policy areas of development cooperation:
KfW is financing the provision of equipment for a national data centre and the development of a nationwide IT network between ministries, authorities, municipalities and decentralised state structures. Digitally available information also facilitates the work of the national municipal development fund supported by KfW.
KfW is also financing infrastructure projects in the area of water and wastewater. This promotes the production and distribution of drinking water for an additional 540,000 people in urban and suburban areas. A KfW-financed sewage sludge treatment plant will improve hygiene for 300,000 people as well as protecting the sea and Lake Nokoué from pollution.
The reform of the vocational training system also provides for the development of a sustainable financing instrument. KfW is contributing to this development. In addition, in order to promote the private sector in rural areas and in the agricultural sector, it provides funding to both the umbrella cooperative association “Faitière des Caisses d’Epargne et de Crédit Agricole Mutuel” (FECECAM) and the “Fonds National de Développement Agricole” (FNDA).
Benin also possesses unique natural wealth. To support the Pendjari, Arli and W National Parks, KfW has launched the “Fondation des Savanes Ouest Africaines” (FSOA) environmental foundation. The funds generated from the interest income of the foundation’s capital benefit the management and maintenance of the parks.
KfW Development Bank is supporting Benin on its path to achieving sustainable development that benefits large parts of society.