Finally, in terms of closing or liquidating a business Benin ranks 118th out of 183 countries. Here it takes four years to close an estate or enterprise at a total cost of 22-percent of its value with an average recovery rate of 20.2 cents on the dollar.
Table 1 presents a summary of these rankings as well as Benin’s overall ease-of-doing business rating. All things considered, Benin is a difficult place to do business in. It does least bad, however, in the area of construction permits, registration of property, and cross-border trade.
Table 1:
World Bank Ease of Doing Business
Assessment and Rankings: Benin
Prospects
Benin, while a hard country to do business in and corrupt as in much of the rest of Africa, nonetheless has potential. Its democracy is a relatively stable one that only occasionally demonstrates tendencies towards violent inter-ethnic violence, and since the painful transition to a market economy in 1990 growth has been, if not great, then at least steady. While low-value cotton remains its principal export commodity and subsistence agriculture commands the labor of most of the population, Benin’s position in growing West Africa and link to France and through it Europe has given it an opportunity to develop as a nascent trade, transport, and service hub for western Nigeria and eastern West Africa.
Figure 3:
Benin Economic Growth,
Percent Increase, 2003 – 2013
What’s more, Benin’s small population means that it may be able to leverage both aid and growth more capably than its giant neighbor to the east—especially since democratic accountability, regulatory efficiency, and policy effectiveness is generally much easier to achieve in small countries than large ones. The country’s private sector is also in good position to exploit Benin’s potential to play an emerging role in global and regional supply chains. This is especially the case for textiles given its abundant production of cotton and easy access to both the European and Nigerian markets.
Still, for this to happen and for growth to take the place of aid Benin must embark on further reform to the rules and regulations that create its business environment. It takes scandalously long to register a legal business while contract enforcement and taxation are onerous deterrents to investment. Still, if this can be done and coupled with infrastructure improvement and a commitment to increase access to health and primary education, Benin will be able to go a long way towards its goal of becoming an emerging economy by 2025.
Jeffrey Cavanaugh holds a Ph.D. in political science with a specialization in international relations from the University of Illinois at Urbana-Champaign. Formerly an assistant professor of political science and public administration at Mississippi State University, he writes on global affairs and international economics for AFK Insider, Mint Press News and BAM South.
