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Benin achieved independence from France in 1960 as the Republic of Dahomey, and was renamed the Republic of Benin in 1975. The country extends from the Gulf of Guinea in the south, where the vegetation consists of tropical forests, and mangroves in the freshwater lagoons along the coast, to arid savannah in the northern zone. Little is known of north Benin’s pre-colonial history, but the south of the country was settled by the Adja, a tribe who migrated east from the Mono river, and founded the town of Allada. Later this city became the capital of the kingdom of Great Andra, which reached the peak of its power in the 16th and early 17th century. The kingdom then split into three, and one group founded the town of Abomey, mingling with the scattered indigenous tribes of the area to form the Fon people and the state of Dahomey. By this time, Dutch, French and English traders had joined the Portuguese in the area, and the trade in slaves, which had been a component of pre-colonial Benin, had become the region’s primary export activity. By 1700 as many as 20,000 slaves were being transported annually, many of whom had been raided from the surrounding area by the Allada kingdom, but competition between the city-states for access to the European trade had destabilised the country’s existing power structure, and there was much rebellion and unrest. At this point, Dahomey had become a strongly centralised state with a standing army (indeed, in the early 18th century, King Agaja of Dahomey initiated the practice of using women as soldiers) and backed by European contacts and arms, it rose to dominate the region. In order to establish direct contact with European traders, it conquered most of the land to the south of the country, and although its expansion to the east brought it into conflict with the Yoruba kingdom of Oyo, which captured Abomey in 1738 and forced it to pay annual tribute until 1818, it gained great wealth and power as the chief supplier of slaves to the European market. It also expanded northwards, continuing to supply slaves to the Islamic market well into the 19th century. During the 1880s, competition between the European powers for control of the African colonies intensified, and the French, who already held a protectorate at Porto Novo, attempted to secure the Dahomey coast in order to prevent it falling into German or British hands. Despite the resistance of King Behanzin, they defeated Dahomey in 1893, and by 1898 had moved on to subjugate the northern part of present-day Benin. Their advance was curtailed to the East by the British in Nigeria, and to the west by the Germans in Togo, and these limitations determined Dahomey’s borders when it became part of French West Africa in 1904. Although there were a number of revolts among the less centralised groups, their occupation was not characterised by any widespread resistance. French rule, especially in the south, relied strongly on local administration, and by 1946 Dahomey had its own parliament and representation in the French national assembly. In 1958 it became an autonomous state, and in 1960 gained full independence. Dahomey is comprised of more than 40 ethnic groups, of whom the Fon, the Adja, the Yoruba and the Bariba are among the most prominent, and although decolonisation had been peacefully achieved, political society became fragmented after independence. Numerous power struggles took place, and for over a decade the country was blighted by extreme political unrest. Although Dahomey’s first president, Herbert Maga was a respected statesman who had served in the French parliament since 1951, he was overthrown by a military coup in 1963, and between then and 1972 there were seven more changes of government, including four coups d’etat. The last of these coups brought Major Mathieu Kérékou to power, and he established a ruling military council containing equal numbers of army officers from the three main regions. He declared Dahomey a Marxist-Leninist state, and actively allied the country to the Eastern bloc, nationalising banks and financial institutions. In 1975, Dahomey was officially renamed the People’s Republic of Benin in a further effort to detach the country from its colonial past. A single ruling party was established, and Kérékou’s administration undertook numerous campaigns to break the power inherited from the colonial administration by local chiefs and dignitaries, including a particularly controversial pogrom against the priesthood and the predominant voodoo religion. He also implemented the collectivisation of some of the arable land, and nationalised trade in a number of agricultural products, expanding the state bureaucracy for the purpose. To some extent the economic boom in Nigeria financed this state expansion, especially through the informal economy, but in the early 80s Nigeria’s own economic crisis led it to expel its Beninois workers and close its borders. Riots, strikes and coup attempts followed, and by 1989 social discontent and economic difficulties had become so extreme that Kérékou renounced Marxism and accepted the IMF’s suggestion to cut public expenditure. In 1990 he instituted a new democratic constitution, and was defeated in the subsequent elections by Nicéphore Soglo, a former official of the World Bank. In 1980 Benin’s total external debt had only amounted to $424 m. but by 1990 this had tripled to $1,292 m., and Soglo was constrained to operate under conditions imposed by the IMF and other international donors in order to qualify for continuing loans. He accordingly embarked on a structural adjustment programme, including extensive privatisation, but although these policies brought considerable prosperity to the trading ports of Cotonou and Porto Novo, poverty was not alleviated in the rest of the country, and the 50% devaluation of the CFA franc in 1994 caused additional hardship and unrest. In 1995 Soglo’s political party failed to reach an overall majority in the national assembly elections, and in 1996 Kérékou came out of retirement and stood successfully in the presidential elections. He was re-elected in 2001, although this second victory was disputed by his opponents on the grounds of irregularities and dubious electoral practices. However, the opposition party, led by Soglo’s wife Rosine, had won the 1999 assembly elections, and the government continues to pursue the liberal economic policies of the last decade. Benin has successfully made the transition from a virtual dictatorship to a pluralistic political system involving a number of parties from across the political spectrum, and this has given it a high standing with the international community. The country has strengthened its ties with France and the West, and Cotonou was chosen to host the 2001 EU-ACP summit. In Africa, its foreign relations are generally satisfactory, except for a long-standing border dispute with its northern neighbour, the Republic of Niger. It enjoys a stable relationship with Nigeria, and has adopted a mediating role in the political crises in Liberia and Togo. Benin remains one of the world’s poorest countries, and is heavily dependent upon international aid. It is one of the most densely populated states in Africa, with an average of 50 people per square kilometre, most of whom are concentrated in the south of the country. Overall, the population has grown from 2.1 million in 1961 to its present 6.6 million, and a continued expansion of 2.7% growth per annum offsets much of the growth in real output achieved over the last decade. Historically Benin has always been self-sufficient in food production, but environmental degradation is now increasing, and the country suffers from desertification and soil erosion in the north, and coastal erosion, salinisation of the lagoon system, over-fishing and deforestation in the south, where intensive agriculture has destroyed almost all the rainforest. 70% of the population are engaged in agriculture, and maize, cassava, millet, sorghum, coffee, cocoa, groundnuts and pulses are grown, mostly for local consumption and regional trade. Considerable numbers of pigs, goats and sheep are also raised, and there is a sizeable fishing sector. Traditionally, the ‘informal sector’ of the economy is of great importance to Benin, and illegal border transactions with Nigeria account for a sizeable proportion of its trade. Industry accounts for only a small percentage of GDP, and is largely confined to supplying local demand. Cement is the only major industrial product, and a small offshore petroleum deposit is also being exploited. Deposits of gold, phosphates and iron ore are known to exist, but these have not been utilised. Palm oil and palm kernel oil have been exported since the 19th century, and the production of cotton increased rapidly in the second half of the 20th century from 572 metric tons in 1950 to around 400,000 in 1995. Currently, cotton accounts for 84% of Benin’s exports, but the world price of cotton, which was 179 cents per kilogram in 1995, has fallen significantly to stand at 129 cents per kilogram in 2000.
In 1999, the country was ranked 157 out of 174 countries on the Human Development Index. One third of its population was estimated to be poor in the mid-1990s, and 14% were undernourished. In 1999, GDP per capita (PPP US%) was $933, compared with Switzerland’s $27,171. Life expectancy is 53 years, the infant mortality rate is 87 per 1,000 live births, and 145 children out of 1,000 die before their 5th birthday. Malaria is endemic, 37% of the population has no access to safe water, and the adult literacy rate is 61% .The WHO records that 2.45% are living with HIV/AIDS, but certain key groups give even greater cause for concern. For instance, prevalence of HIV among antenatal women in major urban areas has increased from ‘no evidence’ in 1986-87, to 4% in 1998, while among sex workers it has risen from 5% in 1987 to 54% in 1996. In 1998 there was one doctor per 10,000 people, and Benin is still paying more on debt service than on health.
In April 2003, Benin became the eighth country to reach Completion Point under the HIPC initiative. According to our analysis, this relief should provide it with sufficient resources both to service debt and to meet the MDGs. However, Benin is still one of the poorest countries of the world and will have to face huge challenges if it is to meet the MDGs. In particular, Benin is highly dependant on revenues from cotton exports. Following the advice of the World Bank and the IMF, Benin liberalised its cotton market and eliminated the monopoly of the state-controlled cotton company SONAPRA. We are particularly concerned that while Benin has had to liberalise its market under IMF tutelage, the United States is allowed to continue to subsidise its own cotton farmers to the tune of more than $3 billion per year. This means that highly subsidised US cotton is being dumped on the international market, depressing the price received by Benin. As a result of these subsidies, the industrialised world’s cotton farmers are making a profit selling on the international markets, while for the ‘low cost’ African producers, the cost of getting cotton to the international market is higher than the international price. The enhanced HIPC initiative provides a reduction of 30% of the NPV of Benin’s debt at completion point in 2002. The World Bank says that the country will be able to diversify its economy and will have a sustainable level of debt by that date. The average debt service for 2009-18 is due to be nearly a quarter less than without the HIPC initiative. The overall assistance provided under the enhanced HIPC initiative is $265 million, which brings the NPV of debt at end-1998 down from $848 million to $583 million, and the debt to exports ratio down to 150%. Of this assistance, 29% is provided by bilateral creditors and 71% is provided by multilateral creditors, corresponding to the proportion of debt owed to each type of creditor. However, by 2009-18 the average NPV of debt will only be 9% less than it would have been without assistance under HIPC. This is partly due to the accumulation of new debt to which the HIPC reductions do not apply. By 2009-18 this new debt will account for over half of the total debt, and servicing it will account for almost half the total debt service due in the period. Figures produced by the World Bank for the Decision Point
document, show that Benin will have a sustainable level of debt from completion
point on the basis of three indicators –
debt-to-exports ratio, debt-to-revenues ratio, and debt
service-to-revenues ratio – all of which show a gradual decline over the
projection period. The NPV of debt is set to fall well below the 150%
debt-to-export level set by the World Bank, and the debt service-to-revenues
ratio is projected to fall below the 10%. All these indicators are based on
assumptions about the future economic trends of Benin. Real GDP growth is
projected at an average annual rate of about 5˝% in 2001-03, and this growth is
based on assumptions about export revenue from goods and services, in
particular cotton products. Benin is also expected to continue to receive
substantial concessional financing. Benin is also highly dependent on the availability of
concessional external financing, but even if the country was only able to
attract half the grants assumed in the debt sustainability analysis, the NPV of
debt-to-exports ratio would increase by an estimated 57% by 2010. In other
words, Benin's debt would not reach sustainable levels on this basis in the
medium term. Completion Point: March 2003 Finally on March the 25th the IMF and World Bank's International Development Association admitted Benin to the club of countries that have reached the completion point and received substantial debt relief. Benin joins Bolivia, Burkina Faso, Mauritania, Mali, Mozambique, Tanzania and Uganda and will receive approximately $460m in debt relief from all its creditors. According to the institutions calculation this will induce a 31% reduction of the Net Present Value[1] (NPV) of Benin’s debt outstanding at the end of 1998. Moreover debt service payments for Benin will be cut by more than a third over the next decade. While we welcome the release of these resources that can now be used for the benefit of Benin’s people, we point up that once again the reality of facts did not match the promises. Analysis from Jubilee Research shows that the debt relief committed will not be enough to bring down Benin’s debt level to the 150% debt-to-export target, which is considered a 'sustainable' level of debt under the HIPC initiative. In fact even the latest estimates produced by the World Bank in 2002 show a deterioration of 30 percentage points of Benin’s debt-to-export ratio and state that the target ratio of 150% will not be obtain till 2006, if no additional debt relief is provided. The deterioration of the debt-to export ratio is the combined result of the world economic situation and the new borrowings obtained from the Benin’s government between decision point and completion point. Figure 1 Status of Creditor Participation Under Enhanced HIPC initiative
Millennium Development Goals Sustainability Analysis We use a ‘human development’ definition of debt sustainability. Under this approach, debts are only considered ‘sustainable’ when the debt service burden leaves the HIPCs with sufficient funds to meet their human rights obligations under the internationally agreed Millennium Development Goals (MDGs).
This definition of debt sustainability has gained wide acceptance - not only in the non-governmental community, but also in the United Nations, amongst African governments, HIPC Finance Ministers, and even creditor governments. The Irish Government has formally come out in favour of an MDG-based DSA for poor countries. The latest Human Development Report produced by the United Nations Development Programme (UNDP), for example, argues that ‘debt servicing capacity should be assessed relative to the country’s needs for achieving the Goals.’ For many countries this will require full debt cancellation. The HIPC debt-export measure of debt sustainability has little to do with the needs of poor people.’ Therefore we present some calculations. For full details on the calculations and the methodology behind it please see the “Real Progress Report on HIPC” published in September 2003
Sources for History, Politics and Economy are from: Scribner’s Encyclopaedia of Africa South of the Sahara, Vol 1. Simon & Schuster 1997. World Bank Data Book 2001 World Bank World Development Indicators 2001 Telediplomacy Inc. Benin. <Embassy.org--CountryWatch.com> British Foreign & Commonwealth Office, Africa Factbook: Benin World Travel Guide – Benin CIA World Factbook -
Benin
[1] For a definition of Net Present Value please refer to http://www.jubileeplus.org/databank/glossary.htm
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