Benin: Climate Adaptation Efforts Necessary For Sustainable And Resilient Growth

According to the second edition of the Benin Economic Update Report, achieving sustainable and resilient economic growth in the coming decades will depend on efforts to adapt and finance climate investments.  

Titled Adapting to climate change for sustainable, resilient economic growth, the first part of the report analyzes recent economic developments and presents the country’s medium-term outlook. It projects that annual growth will stabilize at an average of 6.2% between 2024 and 2026 (3.5% on average per capita), driven by investment and the expansion of the Glo-Djigbe industrial zone (GDIZ). The end of the gasoline subsidy in Nigeria in May 2023, supply chain bottlenecks following the closure of the border with Niger, and growing demand pressures have led to an increase in inflation to 2.8% in 2023, below the regional average of 3.7% in 2023.   

Fiscal consolidation efforts were successful in 2023, owing to the adoption of innovative tax measures and spending restraint. As a result, the budget deficit was reduced to 4.1% of GDP, the lowest level since 2019, and down from 5.5% in 2022. This improvement was due to an increase in total revenues, which rose by 0.7 percentage point to 15.0% of GDP, while public spending fell by 0.6 percentage point to 19.2% of GDP. Fiscal consolidation is expected to continue in the medium term, with the budget deficit projected to decline further to 2.7% of GDP by 2026.  

“Thanks to fiscal consolidation measures, Benin has been able to withstand external shocks while maintaining an appreciable economic growth trajectory.  The medium-term revenue mobilization strategy will reinforce the government’s domestic revenue mobilization program and make Benin’s economy more resilient”, said Felix Oppong, World Bank senior economist and co-author of the report

The second part of the report looks at the vulnerabilities of the Benin economy to climate change. In line with the projections of the Country Climate and Development Report (CCDR), the study documents that, in the absence of additional adaptation efforts, climate change could lead to increasing economic losses, with average annual GDP losses of up to 19% by 2050. By prioritizing adaptation and resilience, significant strides could be made in poverty reduction, potentially lifting almost half a million people above the poverty in contrast to a scenario where no policy action is taken.  

The report calls for greater action in the agricultural sector, including the adaptation of farming practices, the restoration, and protection of forests, and investment in water resources.   

Decisive action in the agricultural sector is essential, given its importance to Benin’s economy. We need to continue diversifying agriculture in the direction of climate adaptation, promote agroforestry systems, and restore around 300,000 ha of degraded forests,” added Manuela Ravina Da Silva, World Bank environmental specialist and co-author of the report.  

It is also essential to address vulnerabilities in the health system, particularly those exacerbated by climate change, to strengthen the resilience of health and education services and safeguard human capital. Building resilience against urban flooding and investing in resilient transport and digital infrastructure will keep people and markets connected. Finally, Benin should prioritize partnerships with the private sector and the financing of climate investments, as the long-term benefits outweigh the costs. 

Financing climate investments cannot rely solely on the state and its public partners; the contribution of private capital is essential. The private sector should seize the opportunities offered by climate adaptation measures to position itself as one of the engines of green growth”, said Nestor Coffi, World Bank country manager for Benin.

Download the Benin Economic Update in French 

Distributed by APO Group on behalf of The World Bank Group.

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