Benin’s Economic Boom: World Bank Injects 414 Billion FCFA to Unlock Growth Potential

The World Bank approved, on October 31, 2024, funding of 635.5 million euros from the International Development Association (IDA) to support the efforts of the government of Benin with the aim of strengthening growth led by the private sector, improving domestic revenue collection and increasing social and climate resilience. In a press release the World Bank announced the news to the Beninese authorities.

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The financing includes a development policy credit of €135.5 million and a reform guarantee of €200 million approved as part of the financing package with the aim of using €500 million of long-term commercial financing. This is the first IDA guarantee approved since the launch of the World Bank Group guarantee platform on July 1, 2024.

The program is structured around three pillars. The first aims to implement a new public-private partnership (PPP) framework. The aim of this program is to attract and facilitate the participation of private sector actors in public projects by improving access to finance for small and medium enterprises, providing guarantees for loans granted by banks and microfinance institutions, and offering capital, advice and other forms of support . .
The second pillar supports reforms aimed at boosting domestic revenue collection, thereby creating the necessary fiscal space for public investment and debt sustainability. The third pillar targets reforms to strengthen social and climate resilience. These include expanding the single social register, strengthening the disaster risk management system and adopting regulations for sustainable and resilient cities.

“Benin is committed to the structural transformation of its economy, which has had a positive impact on growth in recent years. To make this growth more inclusive and sustainable, the private sector will need to increase its participation in key sectors of the economy. Continued reforms regarding public-private partnerships will make the country more attractive for businesses, and will support climate action financing,” underlined Nestor Coffi, World Bank operations manager for Benin. “This funding will also support reforms to protect the most vulnerable, strengthen the social contract, facilitate access to services and increase resilience in the face of climate shocks.”

The operation is in line with Benin’s commitments in the fight against climate change and the objectives of the Paris Agreement. It supports the green, resilient and inclusive development agenda by strengthening the country’s ability to adapt and its resilience to climate change by improving prevention, preparedness and response.

This funding is a continuation of the achievements of the first operation in the series of operations worth $230 million, which made it possible to move forward with reforms aimed at strengthening Benin’s capacity, managing disaster and climate risks effectively and increase its resilience to the socio-economic and budgetary effects of natural disasters.

IDA in brief

The International Development Association (IDA) is the World Bank organization that helps the poorest countries on the planet. Established in 1960, it provides low or no interest grants and loans to finance projects and programs likely to stimulate economic growth, reduce poverty and improve the lives of the most disadvantaged. The IDA is among the main donors to the 76 poorest countries on the planet, 39 of which are in Africa. IDA’s resources help bring positive change to the lives of 1.6 billion people in eligible countries. Since its establishment, the IDA has supported development activities in 113 countries. The annual amount of its commitments is constantly increasing and has averaged $21 billion over the past three years, with approximately 61% of this amount going to Africa.