Online Country Talk: Benin

The fifth country talk series organized by the FES economic policy competence center came off on 5^th November, 2020. The focus of the 5^th country talk was on how Covid-19 has affected employment and the economy of Benin.

Benin had its first confirmed Corona virus case on 16^th March, 2020. The total Covid-19 cases in Benin is 2,683 with 41 deaths; 2,455 recoveries and 187 hospitalizations. This has threatened the economic and health systems of Benin; with greater stress on employment.

About 96.5% of Benin’s workforce is in the informal sector; this is the sector that drives growth, create employment and spearheads innovation. However, due to the precarious nature of work – no contract, insecurity, absence of social security and health insurance - in the informal economy, its actors have not been able to weather the storm of Covid-19.

The informal economy in Benin has suffered various consequences emanating from government’s responses to mitigate Covid-19. The responses have tested the vulnerabilities and resilience of the sector. There has been an increase in the precariousness of the sector and weakened the capacity of its actors to comply with Covid-19 measures.

As a negative impact, there has been a vicious cycle of low demand, declined production, low income and high rates of unemployment in Benin as well as higher incidence of businesses collapsing. Other challenges the informal sector faces are: shortage in the supply of raw materials due to the closure of borders to trading partners, lack of operational cash flow and limited access to financial assistance.

These notwithstanding, there has been complementary skills to cushion production like the introduction of delivery services by restaurants. It has also led to reorientation towards activities such as nose mask production by tailors; hand washing devices by welders; and hydro-alcoholic gel/soap by cosmetic craftsmen. Further, there has been new employments in the digital industry - teleworking.

Responses by the government of Benin to cushion its citizenry against the negative ramifications of the crisis have been ambitious but limited in scope. These are but not limited to increasing spending on health-related activities, cash transfers to the vulnerable and financial support to businesses. Other supportive measures have been the reduction of refinancing rate for banks, collateral free loans through the banks and 3 months postponement of loan repayments.

The government of Benin has not been able to offer expansionary responses because of limited fiscal space due to high public debts.

As a recommendation, experts suggest greater support from international community; increase in revenues to meet the basic needs of the population and building strong cooperation between national and international communities.