Africa > West Africa > Benin > Benin Finance Profile

Benin: Benin Finance Profile

2015/02/26

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Benin’s economy has continued to strengthen over the completed years, with real GDP increase estimated at 5.1 % and 5.7 % in 2008 and 2009, respectively. The major driver of increase is the agricultural sector, with cotton being the country’s major export, while services continue to contribute the major part of GDP largely because of Benin’s geographical location, enabling trade, transportation, transit and tourism activities with its neighbouring states.

The country continues to maintain a favourable macroeconomic outlook, even though the financial crisis has brought significant inflationary pressures as a result of higher food and fuel prices. Inflation soared to 12 % in September 2008, next maintaining an average of 1.3 % in 2007. The external current account is expected to widen from 7.4 % of GDP in 2007 to 10.4 % in 2008, reflecting the terms of trade shock.

Benin’s financial sector is dominated by banks, and in general remains shallow. However, a series of reforms were undertaken in the 1990s, which resulted in the consolidation of the banking sector and in the privatization of all national banks.

A legal framework regarding licensing, bank activities, organizational and capital requirements, inspections and sanctions (all applicable to all nations of the Union) is in place and underwent significant reforms in 1999. There is no customer deposit insurance system.

Benin has a lively and diversified microfinance sector. Data from 2003 by the Central Bank stated a penetration rate of microfinance services of almost 60 %. In 2006 the Ministry of Microfinance and Employment of Youth and Women counted 762 organizations with 1308 branches, inclunding Cooperatives, NGOs, Savings/Credit Associations and government projects. Programmes for strengthening the sector are carried out on national and regional levels, such as the PRAFIDE (Programme Régional d’Appui à la finance Décentralisée). The microfinance sector is as well subject to supervision through the Central Bank inclunding the responsible Ministry for Microfinance and Employment of Youth and Women.

Benin is member of the regional Bourse Regional des Valeur Mobiliés (BRVM) located in Abidjan, Cote d’Ivoire. Stocks were issued by a number of companies in the region. Listed bonds were half issued by companies and half by governments of the West African Monetary and Economic Union (UEMOA).

The payment and settlement system and clearing mechanisms were reformed in 2004 through the BCEAO and offer RTGS and SWIFT access to banks, financial institutions, the stock exchange inclunding the Central bank and appropriate banks.

The insurance sector in Benin remains relatively small, with insurance premia equivalent to 1.2 % of GDP. Eight insurance companies, two of which are majority-owned by foreign companies, are involved in the provision of life and non-life insurance products. The two major insurance companies controlled almost two thirds of all market, reflecting a high degree of concentration. Insurance supervision is carried out through the Direction du Contrôle des Assurances, reporting to Benin’s Ministry of Finance and the Commission Régionale de Contrôle des Assurances.

Two pension funds operate in the country, one for civil servants, and the other mostly for salaried employees of private sector companies. The initial covers approximately 30,000 people, while the latter about 15,000 people.

Benin is part of the West African Monetary and Economic Union (UMEOA) and has thus adopted the CFA Franc, which is issued by the Central Bank of the West African States (BCEAO). The BCEAO is not only responsible for the monetary and reserve policy of Benin and the other member states, but as well for the regulation and oversight of financial sector and banking activity. In particular, the Banking Commission within BCEAO is the in general responsible body for matters relating to financial sector supervision.

Banks and finance

Benin’s financial sector is dominated by banks, and in general remains shallow. However, a series of reforms were undertaken in the 1990s, which resulted in the consolidation of the banking sector and in the privatization of all state banks.

A legal framework regarding licensing, bank activities, organizational and capital requirements, inspections and sanctions (all applicable to all countries of the Union) is in place and underwent significant reforms in 1999. There is no customer deposit insurance system.

Benin has a lively and diversified microfinance sector. Data from 2003 by the Central Bank stated a penetration rate of microfinance services of almost 60 percent. In 2006 the Ministry of Microfinance and Employment of Youth and Women counted 762 organizations with 1308 branches, including Cooperatives, NGOs, Savings/Credit Associations and government projects. Programmes for strengthening the sector are carried out on national and regional levels, such as the PRAFIDE (Programme Régional d’Appui à la finance Décentralisée). The microfinance sector is also subject to supervision through the Central Bank as well as the responsible Ministry for Microfinance and Employment of Youth and Women.

Benin is member of the regional Bourse Regional des Valeur Mobiliés (BRVM) located in Abidjan, Côte d'Ivoire. Stocks were issued by a number of companies in the region. Listed bonds were partly issued by companies and partly by governments of the West African Monetary and Economic Union (UEMOA).

The payment and settlement system and clearing mechanisms were reformed in 2004 through the BCEAO and offer RTGS and SWIFT access to banks, financial institutions, the stock exchange as well as the Central bank and special banks.

Banque Internationale du Bénin (I.BE)
Bank of Africa Benin
Continental Bank Benin
Diamond Bank Benin (DBB)
Ecobank
Financial Bank
Finadev
Caisse Nationale d'Epargne
Credit du Bénin
Equibail

Ease of Doing Business in Benin

reforms made by Benin.