Benin has been hailed as a rising model of economic growth and revenue mobilization, but persistent challenges in poverty reduction and tax efficiency continue to weigh on its progress, according to the World Bank’s latest report.
The third edition of the Benin Economic Outlook, released in June 2025 under the theme “Increasing Domestic Revenue Mobilization While Protecting the Poor,” offers an optimistic assessment of the country’s recent economic performance.
The report highlights a robust 7.5% growth in 2024, driven primarily by the services and industry sectors.
Services benefited from revived informal trade and improved ties with Nigeria, while industrial output rose by 5.9%, supported by reforms in agriculture and significant investments in the Glo-Djigbé Industrial Zone (GDIZ).
Despite regional uncertainties and external pressures, Benin’s resilience has been noteworthy.
The current account deficit narrowed, and foreign exchange reserves climbed to cover 4.7 months of imports in 2024. Looking ahead, growth is projected to average 7.1% between 2025 and 2027, propelled by agriculture, industry, and exports.
The report commends reforms aimed at boosting domestic revenue. Tax revenues have surged since 2016 due to the digitalization of tax administration, the introduction of a medium-term revenue mobilization strategy, and the simplification of the tax code.
Adjustments to corporate tax rates and reforms to personal income tax (IRPP) have further supported this growth in revenue.
These measures, coupled with stricter spending controls, have enabled significant fiscal consolidation, bringing the budget deficit in line with WAEMU fiscal rules and reversing the recent upward trend in public debt.
However, the World Bank warns that Benin’s tax productivity and efficiency remain below those of peer nations. A large informal sector and widespread tax exemptions hinder the country’s ability to maximize revenue. The report calls for improved direct tax collection, more efficient excise duties and VAT systems, and the removal of regressive exemptions.
The analysis also shows that Benin’s budgetary system reduced inequality by 3.0 Gini points in 2022, largely due to in-kind transfers.
Yet, this impact is weaker than in other WAEMU states.
The Bank recommends better targeting of subsidies and transfers to shield the poorest households from the burden of indirect taxes, as well as enhancing the efficiency of public investments—particularly in transport and water—to strengthen long-term growth and poverty alleviation.
The World Bank concludes that Benin is on a promising path, with bold reforms delivering impressive results in growth and public finances. But to transform this momentum into shared prosperity, continued efforts in tax justice, social protection, and efficient investment remain essential.
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