Benin and the IMF
Poverty Reduction Strategy Papers (PRSPs)
Free Email Notification
Table of Contents
1. Since the economic crisis of the 1980s, the issue of poverty has received constant attention in Benin and has become a point of increasing concern to the authorities and to the country's development partners.
2. In an effort to effectively combat this phenomenon, various initiatives have been undertaken and a number of programs have been implemented including the National Program on the Social Dimension of Development Strategy (SDD); the National Community Development Program; Local Development Support Programs; and the National Employment Program. Additionally, the government has implemented specific projects to develop education; combat diseases; improve health; support agriculture; food security; and farmers' organizations; develop sanitation infrastructure; and protect the environment.
3. For the most part, these efforts have produced encouraging results, and their impact is becoming increasingly visible. For example, the country's Human Development Index (HDI)1 has risen from 0.368 in 1994 to 0.421 in 1997, according to the 1999 edition of the UNDP Human Development Report.
4. Progress made in the battle against poverty is also worth noting: great importance is placed on budgetary allocations to social expenditure, particularly with regard to the Public Investment Program; sectoral policies have been refined and include measures to reduce poverty; women's participation in development and the promotion of grassroots development have received increased attention; and national antipoverty measures have been implemented to empower local communities.
5. There has been undeniable progress in terms of improved living standards. However, it must be noted that there remain shortcomings that deserve special attention. In cooperation with the country's development partners, a more comprehensive strategy will be implemented.
6. The government is aware that the development and implementation of this national poverty reduction strategy will require considerable effort and broad public participation through various representatives.
7. Consequently, it will take some time to put together a comprehensive poverty reduction strategy paper (PRSP) that can serve as a framework for coordinating the government's economic, financial, and social policies. The PRSP will also serve as the frame of reference for support by Benin's development partners. The government has begun work on preparing the strategy and is confident that the PRSP will be ready within the next ten months.
8. In the meantime, the government has prepared this interim poverty reduction strategy document describing policies that it intends to implement in the coming twelve months. Policies, objectives, and strategies described in this report may be amended during the process of preparing the PRSP.II. Benin's Poverty Profile
9. With a 1999 per capita GNP of approximately US$398, Benin is one of the poorest countries in Africa. Despite economic growth averaging 5 percent per year between 1995 and 1999, and the improvements in the redistribution of this growth, there remain significant pockets of poverty in the country.
10. The poverty threshold in 1997 was CFAF 144,261 per year (US$198 equivalent) per adult in the urban areas, compared with CFAF 56,500 (US$78 equivalent) in rural areas—a country average of CFAF 77,124 (US$106 equivalent). Thirty-four percent of the population have incomes below the poverty threshold. Additionally, the human poverty index (HPI), which takes into account health, education, and demographic indicators, about one-half of the population is affected by poverty, compared with 41 percent in sub-Saharan Africa.
11. Access to health care services, particularly obstetrics and gynecology services, remains limited. With only one doctor for every 10,948 inhabitants and one midwife for every 10,927 inhabitants, Benin falls short of the standards set by the World Health Organization of one doctor for 10,000 inhabitants and one midwife for 5,000 inhabitants.
12. With regard to education, illiteracy is still widespread among adults: 47.8 percent of men and 70.8 percent of women are illiterate. At the primary education level, 41 percent of children ages 6-11 are not in school, and the student/teacher ratio, although improving, remains high.
13. Only 56 percent of Benin's households have access to safe drinking water, and there are vast inequalities between the rates for urban and rural areas (71 percent and 46 percent, respectively).
14. On the employment front, the labor market is characterized by an increased reliance on informal employment, family helpers, and the use of apprentices. In addition, training and job opportunities are not well matched.
15. Regarding the gender distribution of poverty, a 1996 survey found that 46 percent of poor urban households were headed by women, while the comparable figure for nonpoor urban households was only 26 percent. While women accounted for 42.6 percent of the workforce in 1992 (rising to 50.8 percent in 1996-98), they earned only 23 percent of household income (and 30 percent in 1996). Thus, on the one hand, women are more acutely affected by poverty than men, and, on the other, their contribution to the national wealth is underestimated, or at least underrewarded (with the second phenomenon partially explaining the first).
16. From a human poverty standpoint, the rates are once again most critical among women:
17. All of these precarious circumstances imply that 40 percent of the population is at a significant risk of dying before age 40. The maternal mortality rate is estimated at 498 for every 100,000 live births. Infant and child mortality rates are also high, at 9.4 percent and 16.7 percent, respectively.III. Poverty Reduction Policies and Strategies
18. To combat poverty more effectively, the government of Benin adopted in 1994 a strategy known as the Social Dimension of Development (SDD) aimed at:
19. In support of this strategy, a National Economic Conference was held in 1996, followed in 1997 by an International Symposium on Common Minimum Social Services. This concept, which is expected to evolve over time, is currently limited to meeting needs in five essential areas: education, access to primary health services and care, food security, development of income-generating capacity, and economic integration. The institutional framework for implementing the strategy is based on the Community Development Units (CDU).
20. These arrangements were supplemented in 1998 by the National Community Development Program (PNDC), which represents a new approach to development planning that addresses basic needs identified as priorities by the beneficiaries themselves.
21. In addition, a national plan for combating poverty during the period 1998 to 2002 was adopted in 1998. Its principal objective is to achieve a sustainable rate of economic growth that will produce a substantial increase in income per capita by the year 2002.
22. Finally, a ministry specifically responsible for social protection and the status of women was created in 1998.
23. In addition to the national policies and strategies described above, other policies and strategies with an antipoverty component have been adopted at the sectoral level. These specifically address health, education, rural development, water, social protection, rural roads, environmental, and sanitation issues.
24. While previous economic and financial policies have achieved satisfactory macroeconomic results, efforts to ensure a more equitable redistribution of growth have not always been as effective because of the difficulty to reach the target groups and the lack of suitable impact indicators. Moreover, several of the socioeconomic programs and projects undertaken during this period were found to be nonviable or ineffective, because beneficiary groups played such a small role in their preparation and monitoring. The comprehensive poverty reduction strategy that the government is preparing will address these issues.B. Macroeconomic Framework And Structural Reforms
25. Over the course of the 1990s, Benin has implemented, with the support of the international community, a series of economic reforms aimed at reestablishing sustainable growth, reducing internal and external imbalances, and improving its population's standard of living.Economic and financial performance, 1994-99
26. Overall economic and financial performance has been satisfactory since 1994. The real growth rate has averaged 5 percent per year, and average annual inflation has been 3.7 percent, following the correction of relative prices after the 1994 devaluation of the CFA franc. Economic growth has also been driven by the recovery of both consumer spending and investment. The investment ratio has averaged 17 percent of GDP, reflecting the combined impact of higher public investment and the recovery of private investment.
27. The stabilization of public finances has been accelerated and has resulted in an average primary surplus2 of 3.3 percent of GDP. Budgetary revenues have grown substantially, rising from 11 percent of GDP in 1994 to 16 percent in 1999, due to more effective tax and customs administration and efforts to broaden the tax base. With regard to expenditures, the results reflect a better resource allocation toward infrastructure, investment, and education and health services.
28. As part of the government's policy to withdraw from productive activities, new sectors have been liberalized and opened to private investment. Moreover, progress has been made in diversifying the economy, due primarily to private investment in the agricultural and manufacturing sectors.1999 outcome and the medium-term macroeconomic framework
29. Overall, Benin's macroeconomic situation was strengthened in 1999:
30. Regarding public finances, budgetary revenues rose appreciably, 3.6 percent more than expected, and expenditures were contained below the authorized ceilings. Thanks to these developments, and the government's efforts to reduce domestic payments arrears, the overall budget deficit (on a cash basis) was 2.9 percent of GDP, versus 5 percent in 1998. For the year 2000, it is expected to be approximately 3.6 percent of GDP. This increase primarily reflects the substantial growth of social spending and the relatively high level of investment.
31. The goal of poverty reduction can only be achieved within an environment of financial stability and strong and sustainable economic growth. Therefore, the government intends to continue implementing policies and reforms to ensure a real economic growth rate of 5 to 6 percent in coming three years. This will be accomplished by gradually raising the investment ratio to 20 percent of GDP in the medium term. Inflation should be kept below 3 percent, while the external current account deficit, which could reach 7.2 percent in 2000, will be gradually reduced, assuming an increase in public savings and a more favorable international environment. This will allow the country to reduce its external debt and achieve a viable external payments position. In support of these objectives, the primary budget deficit will be maintained at less than 2 percent of GDP, while the overall budget (excluding grants) will be balanced.Macroeconomic and structural policies
32. The government is convinced that it is necessary to pursue and intensify the macroeconomic and structural policies now in effect in order to preserve progress to date, and ensure the strong and sustainable growth that is essential for effectively combating poverty.
33. To achieve these objectives, the government will continue to base its overall development strategy on a strict budgetary policy; a prudent monetary policy coordinated with member countries of the West African Economic and Monetary Union (WAEMU); an active involvement in regional integration; and an acceleration of the structural and sectoral reforms now under way. These actions will help enhance the efficiency of the public sector, expand the role of the private sector, and stimulate private investment in diversifying output, thereby raising both government revenue and private income.
34. With regard to public finances, the government will proceed with the implementation of budgetary reform launched in 1999, which aims at increasing the efficiency of public spending and making the budget management transparent. This reform relates to (i) improving the budget preparation process to ensure an optimal allocation of resources, (ii) modernizing the expenditure monitoring and control system, (iii) empowering the line ministries and making them accountable, and (iv) making use of performance indicators. With the expanding use of performance indicators, it will be possible to accurately measure the impact of public spending, particularly social spending, on target groups. By way of this budgetary reform, the government is giving itself the means and the tools to assess and improve the impact of its social programs on poverty reduction.
35. The government will also ensure that budgetary allocations to the social sectors are consistent with the poverty reduction strategy, and its tax policy will promote greater equity in income distribution.
36. Finally, the government will pursue its efforts to strengthen the tax administration and improve revenue collection, which helped increase budgetary revenues during 1999.
37. Regarding monetary policy, the authorities will, as in the past, pursue with the other WAEMU countries a policy aimed at achieving price stability. To this end, credit policy will continue to be prudent, with a particular emphasis on the quality of loans, and interest rates will remain the principal instrument for regulation. Through its active participation in the convergence of sound fiscal policies within the WAEMU zone and its support for an effective policy mix, the country will contribute to maintaining the parity of the CFA franc against the euro.
38. In terms of the various reforms necessary for Benin's participation in regional economic integration, the country has readjusted its accounting rules and procedures and its approach to the taxation of trade, to make them consistent with regional standards. Since January 1, 2000, customs duties have been eliminated between the countries of WAEMU on locally produced goods, and a common external tariff (CET) is now in effect, thereby implementing the Customs Union among member countries.
39. As part of its policy to promote the private sector's role in expanding and diversifying national output, the government will continue to improve the institutional, regulatory, and legal framework for businesses, work to enhance its relations with the private sector, and improve the quality and quantity of its economic infrastructure. It will further pursue economic liberalization by deregulating prices, withdrawing from productive activities (in particular by privatizing public industrial and commercial enterprises) and opening the various sectors of the economy to competition.
40. In this regard, the process of privatizing public enterprises in the telecommunications, energy, and cotton sectors has already begun and should be completed before the end of 2000. In the textile industry, public enterprises are expected to be privatized within the next two years. In the transport sector, steps are now being taken to place the railroad company (OCBN) under concession, to select a private company to manage the Cotonou Airport, and to involve the private sector in managing the Cotonou Autonomous Port in order to improve its performance and keep it competitive. Finally, the government will emphasize investment in infrastructure that supports economic growth, population access to basic social services, and economic integration of rural areas.
41. In the agriculture sector, the government intends to promote the diversification of national output by creating the conditions necessary for establishing or developing pineapple, cassava, cashew, palm oil, and groundnut production. The government also believes that increasing farmers' incomes can substantially reduce the pockets of poverty that now exist in both rural and urban areas. Expanding and diversifying agricultural output and supporting producer prices will be important components of the government's poverty reduction strategy.
42. With regard to the cotton sector in particular, which produces virtually the only cash crop in the country, the government is determined to complete the reforms now under way. These aim at (i) liberalizing the sector and promoting competition, while safeguarding farmers' interests, (ii) enhancing the regulatory role of the government, (iii) expanding national cotton production and increasing farmers' incomes, and (iv) empowering and building the capacity of producers' organizations.
43. The government has already taken a significant step by eliminating the monopsony of the public enterprise (SONAPRA) on primary marketing of seed cotton. The government has also decided to open the capital of SONAPRA to private investment and is currently discussing the modalities and the timing of this divestiture operation. In addition, discussions are under way on how to transfer the responsibility for organizing input purchases to the private sector and setting a regulatory framework defining the government's role in the sector.
44. Aware of the negative impact that corruption has on economic growth and on poverty, the government has moved on several fronts to improve governance. These efforts will be strengthened, and a national anticorruption strategy, designed with broad participation, will be adopted. This strategy includes strengthening the judiciary apparatus and reinforcing administrative and budgetary controls, adopting a law on the illegal acquisition of wealth, and preparing procedural manuals and user guides for distribution to all public administration departments.
45. The approach to improving public services, particularly social services, will continue to be based on reforming the civil service and on quickening the pace of decentralization, which are regarded as integral components of the antipoverty strategy.
46. While the reform of the civil service aims at fostering excellence and producing an efficient public administration, where costs are in line with productivity and with the government's financial means, the decentralization policy now under way aims at bringing the administration closer to the people and encouraging their participation in the management of public affairs. The government is convinced that public participation in the preparation of policies and programs that affect people's lives is an essential condition for endogenous, poverty-reducing development. In particular, local governments will play a predominant role in preparing, executing, and monitoring antipoverty programs. By transferring power to the local governments, decentralization will underscore the responsibility of the local authorities in ensuring that development efforts are effective and have an impact.C. Social Policies
47. In order to effectively combat poverty, the government envisages strengthening the social policies now in place and measuring their results through the generalized use of impact indicators. It will also ensure broad participation of beneficiaries in amending or, as necessary, redefining these policies. In that context, given the impact of population growth, the government will ensure that the objectives of the national population policy are taken into account while implementing other social sector policies.
48. In addition, efforts will be made to improve the social expenditure planning, budgeting, and execution capacities by strengthening human resources and modernizing financial and budgetary management procedures. Budgetary allocations to the social sectors, which are already somewhat sizable, and execution rate will be further increased by strengthening controls over their utilization and making use of delegated contract management to implement most of the investment program for these sectors.
49. The government has already expanded the allocations for education and health to nearly 27 percent of total expenditure in the 2000 budget, bringing them to 6.5 percent of GDP, and will improve their execution rate.
50. A set of measures has already been prepared for the health, education, and social protection sectors. Some of these measures will be implemented within the next 12 months to meet the floating completion point criteria for the enhanced HIPC Initiative.Health
51. The government will continue to devote particular attention to improving the quality, equity, and coverage of health services, as well as their management. The three-year development plan now being prepared will be finalized and implemented. The program for creating health districts will be accelerated, and additional 23 health districts will be established by the end of 2002. This will be in conjunction with priority programs to combat infectious diseases, parasitic illnesses, and AIDS. In the particular case of HIV/AIDS, the government will prepare a strategy for combating this epidemic. Other planned measures include (i) adopting a system of annual performance evaluation in the health sector; and (ii) promoting prevention, including vaccination, maternal and child protection, family planning, and information, education, and communication (IEC).
52. Efforts to reduce the incidence of malnutrition will also be pursued.Education and literacy
53. The main objective of the government is to promote the universal access of the population to good education. Therefore, by making education broadly available, particularly at the primary level, the government intends to overcome the current regional and gender disparities in enrollment levels and reduce illiteracy. To reach these objectives, the government strategy includes for education services:
54. Finally, several specific measures are planned for the coming 12 months. These include (i) eliminating tuition fees for rural students and introducing a system for transferring central government resources to rural schools to compensate for the loss of revenue; (ii) eliminating the grade repetition system in the first year of primary school; and (iii) transferring central government resources to help local communities recruit teachers to fill vacant posts.Social protection
55. Government policy with respect to social protection includes the following objectives:
56. The government has prepared a national policy to support the role of women and has submitted draft legislation to the National Assembly on the Code of Persons and the Family.Water
57. The overall objective in this sector is to improve and ensure the supply of safe drinking water for rural residents. The strategies adopted include:
58. The sector development strategy aims at improving living standards of rural population. The strategy includes:
59. Government policy addresses the following objectives:
60. The strategy includes the following elements:
61. The government will enhance the consistency of its macroeconomic and sectoral policies and ensure that they are targeted specifically at reducing poverty. On this basis, the strategy calls for the following:
62. The government shares the broad quantitative objectives for poverty reduction over the next 15 years that were agreed upon at the summit meetings in Copenhagen, Cairo, Beijing, and Rio de Janeiro, and reaffirmed at the Libreville meeting.
63. These include:
64. These overall, long-term, quantitative objectives will be adapted and refined into medium-term objectives in the poverty reduction strategy paper.B. Participation, Monitoring and Evaluation, and Coordination of the Strategy
65. The antipoverty campaign can only be effective if the majority of the community shares the same vision of development. For such a vision to emerge, it is necessary that the population not only be well aware of external constraints but also take on responsibility for development policy.
66. Benin has adopted this approach to community development as the one best suited to combating poverty and promoting the well being of all levels of society. It requires that the people themselves be involved throughout the process from the conception of projects and programs, through their planning and financial arrangements, to their execution and evaluation.
67. At the national level, in developing and implementing the strategy, the government will involve target groups, civil society, the private sector, and NGOs through their various representatives. It will also introduce a system for monitoring, evaluating, and coordinating the strategy's implementation.
68. Benin has considerable experience in working with the participatory process. This includes participating in the National Conference on the Nation's Vital Forces, the Economic Conference, and the Conference on Minimum Social Services.
69. This experience has provided opportunities to test various participatory approaches. The participatory mechanisms envisaged for preparing the PRSP are based on this experience. They include not only consultation and consensus building, but also IEC programs.Participatory mechanisms
70. To prepare the PRSP, the government has established the National Development and Anti-Poverty Commission. The Commission members comprise the public administration, specialized agencies, and representatives of civil society, including NGOs. Development partners are also represented. Participation will be managed through the commission.
71. The participatory model that the government intends to use consists of consultation and consensus building at both the local and the central levels.
72. At the local level, community representatives, like the community development units, local development associations, local authorities, and municipal associations for the environment, will constitute the basic support for the participatory process.
73. At the local level, this process will include:
74. In addition, 12 regional workshops are planned. They will allow for the identification of the causes and consequences of poverty and will produce guidelines for a national strategy to address disparities among the 12 regions. Consultations will involve representatives of local government and decentralized state agencies, civil society, and development partners now working in the regions or intending to do so.
75. At the central level, two types of participation are envisaged, involving consultations with issue-specific groups and those of a more general nature.
76. Issue-specific consultations will involve exchanges of views and consideration of a given topic on the basis of work conducted by these groups. Participants at this level will be primarily the sectoral ministries and resource persons from civil society, appointed expressly because of their competence with regard to the subject involved. The consultations will generally take the form of restricted discussion and feedback sessions to prepare submissions for the National Commission. These groups will be formed on an ad hoc basis.
77. The strategy and related antipoverty programs will be determined through broad consultations which include meetings of the National Commission, government seminars, discussions with the National Assembly, and technical meetings with development partners.
78. The technical meetings will also address the medium-term macroeconomic framework, as well as economic and social policies, and will involve the appropriate external partners.
79. Expanded consultation workshops at the national level will also be used to inform and raise awareness among representatives of the various social groups and to define quantifiable objectives compatible with the macroeconomic framework. They will also serve to disseminate and possibly amend policies. Representatives of the government, civil society, and development partners will take part in these workshops.Expected results
80. This participatory process is expected to produce the following outcomes:
81. The process of preparing the PRSP began in November 1999 with a technical workshop in Benin that brought together the relevant national technical agencies, the World Bank, the International Monetary Fund, and other development partners.
82. This workshop served to (i) make national agencies familiar with the new approach to relations with the Bretton Woods institutions, and with the objectives and features of the poverty reduction strategy paper; (ii) present a clear picture of poverty in Benin; (iii) examine methods for preparing a proper strategy, monitoring and evaluating it, and selecting indicators; (iv) review issues relating to consensus building and participation; and (v) produce the outlines of a timetable for preparing the PRSP.
83. This process was continued on March 18, 2000, at a workshop for regional heads of the administration, and on March 28, 2000, at a government seminar that established the broad outlines of the approach and its institutional framework. In the interim, Benin participated at an international workshop on PRSP, where it was able to learn about experience in other countries.
84. The remainder of the process will take place in accordance with the timetable given in the attached policy matrix. The PRSP is to be adopted by the government in April 2001.
1 The HDI is based on life expectancy, educational attainment and real GDP per capita, and is published annually since 1990 by the UNDP. 2 Excluding interest and investments financed from external resources.