2012 Investment Climate Statement - Benin

2012 Investment Climate Statement
Bureau of Economic and Business Affairs
June 2012

Openness to, and Restrictions Upon, Foreign Investment

The Government of Benin (GOB) encourages foreign investment. The GOB set up the Presidential Investment Council (PIC) in 2006 to reinforce dialogue between the GOB and investors, and speed implementation of reforms to improve the business environment. The PIC includes local and foreign private investors and government representatives. The PIC also facilitates potential investment in Benin.

Benin's investment code, revised in July 2008, establishes benefits under different investment regimes and grants extensive discretionary power to the Investment Control Commission at the Ministry of Commerce (MC). The MC has a 'guichet unique' (single investment office) to apparently minimize bureaucratic delays for investors. The GOB also established a one-stop-shop at the Benin Chamber of Commerce and Industry (CCIB) to facilitate swift registration of new businesses. Using the center, it is possible to register a new company within two weeks. Beninese law guarantees the right to own and transfer private property. Benin's court system enforces contracts, but the legal process is often slow. An American firm wishing to establish a business in Benin should work with an established local partner and retain a competent Beninese attorney. A list of English-speaking lawyers and legal counselors is available from the Embassy's commercial section and on the Embassy's website http://cotonou.usembassy.gov.

Opportunities for foreign investment may arise from privatization of the five remaining parastatals: SBEE (electricity), SONEB (water), SOBEMAP (port cargo handling), Benin Telecoms S.A., and La Poste du Benin S.A. (mail). Foreign companies are invited to bid on privatizations, and the bidding process is open and well-publicized.

Key economic indices:

--Transparency International Corruption, 2010: 2.8 (2011 not yet available)
--Heritage Economic Freedom, 2011: 56.0
--World Bank Doing Business, 2012: 175
--MCC Government Effectiveness Index, 2012: 82 per cent
--MCC Rule of Law, 2012: 66 per cent
--MCC Control of Corruption, 2012: 54 per cent
--MCC Fiscal Policy, 2012: 79 per cent
--MCC Trade Policy, 2012: 16 per cent
--MCC Regulatory Quality, 2012: 83 per cent
--MCC Business Start Up, 2012: 18 per cent
--MCC Land Rights Access, 2012: 17 per cent
--MCC Natural Resource Management, 2012: 69 per cent

Conversion and Transfer Policies

Benin is a member of the West African Economic and Monetary Union (WAEMU). Benin's currency is the CFA Franc, issued by the Central Bank of West African States (BCEAO). The CFA Franc is pegged to the Euro at CFA 655.957/Euro. The currency exchange rate as of January 10 is approximately CFA Franc 481/dollar.

Foreign exchange is readily available. There are no restrictions on the remittance of profits by companies that invest in Benin. Remittance of profits by individual resident investors is not

Expropriation and Compensation

The GOB is forbidden to nationalize private enterprises operating in Benin by its 1992 privatization law.

Dispute Settlement

Benin is a member of the Organization for the Harmonization of African Business Law, known by its French acronym OHADA, and has adopted OHADA's Universal Commercial Code to manage commercial disputes and bankruptcies. Benin is also a member of OHADA's Common Court of Justice and Arbitration and the International Center for the Settlement of Investment Disputes (ICSID).

Benin's civil courts handle commercial cases, although the backlog of civil cases may result in delays of more than two years before a case proceeds to trial. Benin's courts will enforce foreign court judgments.

Two investment disputes involving U.S. companies remain in litigation.

Performance Requirements and Incentives

Benin' s 2008 Investment Code contains incentives including tax reductions for investors. Depending on the size of the investment, investors may not owe tax on profits, exports of finished products, or imports of industrial equipment for up to one year from the date the business is registered. To obtain these incentives, investors must meet several criteria including employing a minimum number of Beninese nationals, safeguarding the environment, and meeting nationally accepted accounting standards. The Investment Control Commission monitors companies that receive these incentives to ensure compliance.

Right to Private Ownership and Establishment

The right to private ownership and investment is respected. Beninese law guarantees freedom of commerce; choice of customers and suppliers; free movement throughout the country; the right of foreign employees and their family members to leave the country; and freedom from government interference in the management of private enterprises.

Protection of Property Rights

Secured interests in real and personal property are recognized and enforced. Benin's legal system protects and facilitates acquisition and disposition of property, including land, buildings, and mortgages. Secured interests in property are registered with the Land Office of the Ministry of Finance.

Benin is a signatory to both WIPO Internet treaties. Enforcement of intellectual property rights is constrained by lack of enforcement capacity.

Transparency of the Regulatory System

The GOB has adopted policies favoring transparency to foster competition, but the regulatory burden is still often onerous. In 2009 Benin reformed customs procedures and has been implementing more rigorous inspection, scanning, and tracking for imported goods.

Efficient Capital Markets and Portfolio Investment

GOB policy supports free financial markets, subject to oversight by the Ministry of Finance and Economy and the Central Bank of West African States (BCEAO). Foreign investors can seek credit from Benin's private financial institutions and the WAEMU stock exchange.

Competition from State-Owned Enterprises (SOEs)

Private enterprises compete with public enterprises on equal terms and conditions, except for public utilities (electricity and water) and land-line telephone service, for which the public telephone company retains a monopoly.

SOE senior management may report directly to a GOB ministry or board of directors, whose seats are allocated to senior government officials and political leaders, as well as representatives of civil society and other parastatal constituencies. SOEs are required by law to publish annual reports and hold regular meetings of their boards of directors, and financial statements are reviewed by certified accountants and private auditors.

Corporate Social Responsibility

A number of private corporations systematically support corporate social responsibility, notably cellular phone service providers and banks. Such CSR efforts often follow OECD guidelines, and are an important aspect of corporate public relations.

Political Violence

There has been no political violence affecting private investment in Benin since the end of the country’s socialist period in 1990.


Bribery is illegal and subject to up to ten years imprisonment. The GOB promulgated a decree on March 22, 2011 establishing the 'Programme de Verification des Importations de Nouvelle Generation' (PVI--New Generation Import Verification Program) to combat customs fraud. A specific anti-corruption law was passed in 2011 and is awaiting promulgation. The GOB has demonstrated strong political will to end corruption, and has acted against high-profile, allegedly corrupt officials. However, corruption remains a problem in the customs service, government procurement, and the judicial system. Benin is a signatory to the UN Anticorruption Convention. Benin's State Audit Office is responsible for identifying and acting against corruption in the public sector.

Bilateral Investment Agreements

Benin has bilateral investment agreements with the United States, France, Germany, the United Kingdom, Switzerland, Portugal, Canada, Guinea-Conakry, Ghana, Mauritius, Chad, Mali, Burkina Faso, the Netherlands, and China.

OPIC and Other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC) offers financial underwriting for companies wishing to invest in Benin.


Unskilled and skilled labor and qualified professionals are generally available. The GOB adheres to international labor standards, and Benin's Constitution guarantees workers freedom to organize, assemble, and strike. GOB authorities can declare strikes illegal if they threaten public order or the economy, and strikers may be required to maintain minimum services. Approximately 75 per cent of salaried employees belong to unions. There are several union confederations, and unions are independent of government and political parties. Benin's labor code and practice remain highly favorable to employees. Most of the working population is engaged in agriculture or other primary-sector activities.

Foreign Trade Zones/Free Ports

A Foreign Trade Zone near the Benin-Nigeria border is currently operational. Foreign-owned firms have the same investment opportunities as host country entities. Companies must export at least 65 percent of their annual production to qualify for tax-free status and benefit from duty-free importation of equipment and other production inputs.

Foreign Direct Investment Statistics

The 2011 Benin Foreign Direct Investment inflow is estimated at USD 92.5 million. Leading private investments have been made by firms based in Lebanon, India, Germany, and France. Foreign investors have purchased textile, cement, wood, and brewing companies.