Doing Business in Africa: Benin

By Jeffrey Cavanaugh AFKI Original Published: May 30, 2014, 5:32 am

In this AFKInsider series, we explore the regulatory conditions that an entrepreneur is likely to face when setting up a business in sub-Saharan Africa. AFKI presents Doing Business in Africa: Benin.

Doing Business in Africa: Benin

Sandwiched on a thin strip of land between Togo and Nigeria, Benin is a small country in tropical West Africa that has had rocky post-colonial history since gaining independence from France in 1960. Once a relatively rich country due to profits derived from the African slave trade, decline set in during the 19th century due to the banning of the practice and the last slave ship left the country—bound for Brazil—in 1885.

Shortly thereafter the country was directly incorporated into the French colonial empire in 1892. Between then and independence nearly 70 years later the country was ruled in typical colonial fashion by the French—meaning agriculture was dominated by a white elite, infrastructure built to serve commercial agriculture geared to produce cash-crop exports to metropolitan France, the use of divide-and-conquer ethnic politics, and the creation of a small native elite linked to the French colonial government.

Within this milieu Benin’s first president—Hubert Maga—rose to power, first becoming a schoolteacher in the colonial administration then later an elected representative to the French Parliament. This experience served to position him to lead the country when independence came, and Maga emerged as a consensus candidate supported by rival ethnic political groups.

Inter-ethnic squabbling, however, quickly unraveled any sense of national unity once independence was granted and increasingly authoritarian rule set in.  Eventually a three-man presidential council was formed to try to bring stability to the country’s increasingly tumultuous politics, but to little effect as instability in the form of coups, rumors of coups, and the lingering threat of communal violence created chaos.

Fatefully, Benin’s first republic was finally overthrown by a revolutionary military coup led by Mathieu Kérékou in 1972, who formally created a Marxist-Leninist regime in 1975.

Under socialism, Benin at least found a measure of political stability—if not economic prosperity—and received some aid from Moscow, which at the time was riding the high tide of anti-Western revolutionary sentiment in much of post-colonial Africa.

It was not enough to jump start any form of meaningful development, however, and the economy sunk into such penury and ruin in the 1980s that it would ultimately require the intervention of the IMF and massive assistance by the external donor community.

As in much the rest of Africa, the collapse of communism in Europe and the ending of Soviet aid was the final nail in the socialist coffin and what was laughably called Marxist-Beninism came to an end as Kérékou gracefully stepped aside to allow democratic elections and a transition to a market economy take place in 1990.

Since then Benin has been, if not a success, then not a failure, either. The unpopularity of economic reforms instituted by Kérékou’s successor as president— Nicéphore Soglo—ultimately led to the return of Kérékou in 1996, this time via the ballot box instead of military coup.

Kérékou was in turn replaced after two terms by Benin’s current president Yayi Boni—a former banker—in 2006. So far, Benin is a country where democracy seems to be taking root.

Ease of Doing Business

So how does all this influence business conditions?

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