Benin: Investing in Benin
According to the UNCTAD World Investment Report 2023, FDI inflows decreased from USD 346 million in 2021 to USD 267 million in 2022 but were still above the pre-pandemic average. In the same year, the stock of FDI reached USD 3.045 billion, around 17.5% of the country’s GDP. As per the IMF, Foreign Direct Investment (FDI) is projected to experience slight increases in the medium term, rising from 1.6% of GDP in 2023 to 1.8% of GDP in 2028, driven by reforms aimed at enhancing investor confidence. The National Infrastructure Development Plan, which contains a series of private-public partnerships, should help boost FDI. The main investors are France, India, China, Nigeria, and the Ivory Coast (IMF).
The Benin government has implemented a series of reforms to foster investment. These include creating a unified regulatory framework for public-private partnerships, a single business registration desk as well as multiple tax incentives to support private investments. Moreover, the Talon administration initiated a process to modernize public procurements’ provision and to revise fees to transfer state-owned lands. The tax regime in place was also simplified to favor micro and small enterprises (Synthetic Professional Tax). A Presidential Investment Council was created, and an online platform for providing information to investors was put in place. Benin's strong points are its strategic location: the country has access to the sea and shares a border with Nigeria, one of Africa’s leading economies, its role as a trade hub for second-hand vehicles imported from Europe and resold throughout Western Africa, and the fact that it is one of the most democratic nations in the African continent. However, corruption, poor quality of infrastructure, and problems related to electricity supply limit the country's potential attractiveness. In Benin, the law ensures the right to own and transfer private property. Although the court system upholds contracts, it faces challenges with inefficiency and corruption within the judicial process. Overall, the country ranks 120th among the 132 economies on the Global Innovation Index 2023 and 95th out of 184 countries on the latest Index of Economic Freedom.
Foreign Direct Investment | 2020 | 2021 | 2022 |
FDI Inward Flow (million USD) | 174 | 346 | 267 |
FDI Stock (million USD) | 2,831 | 2,945 | 3,044 |
Number of Greenfield Investments* | 3 | 5 | 0 |
Value of Greenfield Investments (million USD) | 44 | 231 | 0 |
Source: UNCTAD, Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Benin | Sub-Saharan Africa | United States | Germany |
Index of Transaction Transparency* | 7.0 | 5.5 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 1.0 | 3.5 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 5.0 | 5.5 | 9.0 | 5.0 |
Source: Doing Business, Latest available data
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
Among the factors that make Benin an attractive destination there are:
Several factors still hinder the country’s attractiveness:
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Latest Update: October 2024