Benin is a country found in Sub-Saharan Africa more commonly known as (SSA). According to the CIA as of a report published in year 2007, 37% of Benin’s population lived below the poverty line. This indicates that nearly half of the inhabitants of Benin live below the dollar-a-day poverty line. The poverty line established in regards to the understanding that it takes at least a dollar to provide the minimum standard of living for individuals on a day to day basis. Benin’s main source of income is agriculture. Cotton is at the forefront of Benin’s economic income making up 40% of total GDP. This provides a problem because of a decrease in the cost of cotton over the years, due to subsidied cotton production in other countries around the world. Subsistence farming also plays a major part in cotton farming troubles. Because over half of Benin’s population practices subsistence farming, many of the natural land and resources are used up. Other exports in Benin consist of crude oil, palm oil, cocoa and seafood. The other 60% of GDP is made up through services, and industry accounting for 15 and 52 percents respectively. While over the years Benin has witnessed great strides toward it’s goal of ending poverty, it still holds the the title of an LIC or Low Income Country..The worldwide recession in 2009 played a large role in hindering the economies advances. Before 2009 Benin’s growth rate was at 4% but dropped to a mere 2.7%. 2010 saw Benin rebound but not by much at 3%. Benin has been working to establish a sound economy focusing more attention on tourism, investment from foreign countries, improvements to food processing and technological advancements. A few factors that are hurting Benin’s chances at economic recovery are a poor infrastructure,corruption, the existence of a weak industry, lack of a competitive trade market and environmental disasters.
Poor Infrastructure In a report by Carolina Domínguez-Torres and Vivien Foster, it was noted that in order for Benin to decrease poverty levels by a substantial amount, a growth rate of 7% would have to achieved. The years 2002 through 2006 saw a 1.6% decrease in the growth rate when compared to that of the years of 1997 through 2001. Benin’s infrastructure contributed to Benin’s prevalence as the highest growth rate during the early 2000 years when the countries rate was at 1.6 percentage points. Research shows that if Benin can increase the overall value of their infrastructure to the levels of their middle-income counterparts then the rate of change could possibly reach +3.2% per capita. The largest difficulty observed with infrastructure was telecommunications. In terms of economic development Benin is split into two areas, the urban South and the rural North. The Northern region of Benin has only one rainy season. This makes it a liability in the agricultural realm. Because of metallic minerals that the Northern region produces, it brings a sense of optimism to the land. Poor transportation infrastructure takes away and hinders any benefits that the people of Benin could get from these valuable resources.
Development of infrastructure in Benin is contingent upon a number of things, namely population and trade. This fact shows why Benin is more heavily impoverished in the North while the more populous Southern region is a little better off. Nigeria is Benin’s closest and most heavily utilized trade partner. Nigeria accounts for over 7.5% of Benin’s GDP although the global recession in 2009 dropped growth to 2.9%. Lately Benin’s growth has been rising rapidly. This is due in part to a positive increase in agricultural production which increased activity at Benin’s port of Cotonou (Benin’s main trading port) and high demand of product from the neighboring Nigeria, Burkina Faso, and Niger. Benin’s road system is 15,700km with two paved interstate corridors. There are also five east west corridors that link Nigeria, Benin and Togo. Because Benin lacks a strong and sound road system there are many delays involved with the transportation of products. In 2005 Benin was producing up to 500,000 metric tons of cotton. Because of financial crisis and the low prices paid for cotton at the time there is no real profit being turned What’s hurting Benin more is that the poesor infrastructure leaves crops untouched. Because the crops can’t be shipped out because of long processing times, cotton crops are being destroyed by pests. Benin has a fragile road network where 69% of its roads are in at least fair condition. This falls 3% short of the average condition for countries at the low income standard. The roads have to be maintained and improved on a continual basis for fear of worsening conditions and a huge drop in their serviceability. Poor road network quality is also an issue that Benin is facing. In many of the highly populated coastal areas in Benin, underengineering is hindering the process of development in Benin. Many jobs are left undone or are taking too long to be completed. This is looked at as a serious blow to business potential. Road infrastructure is also hurt by bad budgeting by the government. The budgeting situation isn’t completely the governments fault though. In 2004 Benin’s budget use was at 90% but due to economy woes and declining revenue, budget execution dropped to 50% in 2005 and to an even lower 25% in 2006. This is due largely to needs across the board that required budget allocation in order to put money into other places. Ports are another integral and necessary part of Benin’s infrastructure. The challenges the ports face are very similar to those of the roads. Benin’s ports are very overcrowded and cannot meet the large demand for trade to Niger and Nigeria. This causes for delays in shipment processing and shipping, as well as imports. The cost of labor at the port of Cotonou was a staggering 46% of the countries revenue in 2005. This is an issue because according to budget these services shouldn’t exceed 20 percent. This is an example of the budget difficulties that arise because of the roads as well. Benin is only covered by 2,000 square km of water. The renewable resources come in at only 3,741 cubic metres a year which is half and also below the average for Sub-Saharan Africa. 35% of water found in Benin is used to grow crops, while the remaining water is used for drinking supply. Urbanization throughout Benin caused an increase in demand for water. Sanitary water has been a problem in Benin for many years, to this there is no sewage system in Benin. Waterborne diseases are a product of waste materials and industrial wastewater that stem from not having proper sanitation programs in effect.Throughout the years Benin has taken great strides in limiting the use of surface water (river, lake, stream) by the population. Over a 10 year period surface water usage dropped almost 10 percent going from 21 percent in 1996 to 18 percent in 2006 which is in line with middle-income countries in SSA. By investing in a few high cost technologies Benin increased its piped water and septic tank usage. Increasing the sanitary water level the overall water supply moved Benin closer to meeting the standard set by the Millenium Development Goals. Over a ten year span improved sanitation progressed from 18% in 1996 to 30% in 2006, and water supply improved from 57% in 1996 to 67% in 2006. Despite great success with its water issues Benin still has a lot more progress to make. In rural Northern Benin population growth has exceeded water access and sanitation. Between the years 2002 and 2006 access to piped water was increasing by 3.3 points a year, but on the other side of things the rural populations usage of water increased by 1.8 points yearly. Moreover while access to septic tanks and toilets was improving by nearly 3%, there was another .2% of the population participating in open defecation, which reduces the level of sanitary water. Lack of sewage systems is greatly enhanced even more because of urbanization. The higher the rate of urbanization means the more industrial growth will increase. Without proper waste treatment practices and facilities, the waste waters arer,e released into surrounding bodies of water, whether they be streets or ocean waters. Another issue hampering Benin’s economy is power production or electricity. 60% of Benin’s population uses artificial energy as their primary sources of energy. Rural Benin is far worse off than urban Benin in this sense. According to data, 53% of the population who live in urban areas have access to a reliable power source while only 2% are using electricity in rural areas. The Beninese people aren’t the only ones affected by an inadequate power supply. Firms in Benin have been experiencing troubles due to lack of power as well. A 2005 reports shows that nearly 70% of firms reported financial losses that they attributed to limited supplies of power. More disturbing is that in the year 2009 firms across Benin reported that because of power outages that occurred at least 24 times a year they took losses of 7.5%. The rates that Beninese firms pay to utilize power is double that of which is paid by the rest of the African countries. Benin’s biggest problem with power is that 60% of their power is imported from neighboring countries. Power output from Benin’s own plants doesn’t match up well with the increasing demand experienced. This adds another financial barrier Benin. Companies typically have to spend almost a hundred times per capita income to gain access to power resources. Benin’s telecommunications infrastructure is very sound and efficient for an LIC. It is actually one the top and most competitive mobile networking environments in Africa, largely due to the fact there are at least 5 mobile network carriers operating in the country. The presence of multiple network providers has allowed for lower prices and increased affordability for consumers in Benin. Internet is a telecommunications tool that is on the rise in Benin. Between years 2000 and 2009 access to internet resources increased from a rate of .2 per 100 consumers to a rate of 6.5 per 100 consumers. Where Benin falls short with its ICT infrastructure is in its landline market. Because Benin’s landline market isn’t liberalized it is run under a state monopoly which has the landline rates higher than both MIC’s and LIC’s.
Corruption
Corrupt government officials and bad money management have been a problem that has plagued Benin throughout the years. Under the rule of president Mathieu Kerekou (1972-1991, 1996-2006), Benin saw various forms of public sector corruption by members of his regime. A more popular incident regarding this matter was when an official Rogatien Biaou fraudulently sold a piece of land belonging to the Beninese Embassy in Washington D.C. to an American company for his own personal gain. Another incident occurred in 2006 during Kerekou’s last term serving as Benin’s president when one of his officials, Cosme Sèhlin was found to be in possession of 40 million American dollars worth of illegal money, and other illegally obtained gifts and products. In 2006 it was time for Mathieu Kerekou to step down after presidency came to an end due to his loss to political opponent Yayi Boni. President Yayi Boni was a breath of fresh air to the Beninese government, but most importantly the Beninese people. He promised to take aim at and rid Benin of all forms of corruption. He offers Benin hope and promise for better days to come. During June of 2006 Boni launched the State Inspector General which was replaced during Kerekou’s rule by the Public Life Moralisation Unit. The sole purpose of the State Inspector General is to investigate corruption within the government regardless of where and who is involved in it. High ranking government officials aren’t the only ones exploiting the poor. According to reports non-government organizations funded by microfinance institutions are in a sense making the poor poorer. Loans are distributed to those who display a strong need for financial assiatance. When it comes time to pay, the loans are collected by a third party and never transferred back into the primary institutions.