Benin - MCA-Benin, a robust and consultative process

Millennium Challenge Account

Located in West Africa, between Nigeria and Togo, Benin is a small country with a population of approximately seven million, one third of which lives in poverty. Progress is attributed to reforms from early 90s when Benin opted for democracy and market economy.

Improving the performances of the port of Cotonou, a priority for MCA-Bénin

Despite growth averaging 5% annually in the last decade, rapid population growth has offset many of these gains and poverty is widespread. Per capita income is below the sub-Sahara African average and poverty has increased in recent years. Economy, essentially fiscal, depends on agriculture and regional trade through the Port of Cotonou. Key impediments to sustainable economic growth and poverty reduction include a non-conducive investment climate and a lack of dynamic private sector. These are aggravated by land insecurity, lack of access to capital, an inefficient judicial system and the increasingly uncompetitive Port.

Reinforcing the capacity of micro, small and medium businesses

The five-year Millennium Challenge Compact (MCC) with the Government of Benin, a programme with an investment of approximately US$307 million, aims to increase investment and private sector activities. It seeks to remove key constraints to growth and support improvements in physical and institutional infrastructures. MCC estimates it will contribute to a 24% economic rate of return. The programme includes four projects:

Access to Land (US$36,020 million)

	Monsieur Simon Pierre ADOVELANDE, MCA-Benin National Coordinator

Land access is among the top constraints to business in Benin. This project aims to create secure land tenure for the poor and non-poor alike and effective, transparent governance of land and property issues. It is expected to reduce the time and cost to obtain a title and the number of land disputes and improve the view of land security.

Financial Services (US$19,650 million)

The high cost or unavailability of credit and financial services means small businesses cannot increase production and employment. This project will help micro to medium-sized enterprises (MSMEs) respond to opportunities. It will expand financial services provided to MSMEs, improve supervision of microfinance institutions (MFIs), increase MFI operational self-sufficiency, decrease MFI portfolio risk and increase the loans guaranteed with land titles.

Access to Justice (US$34,370 million)

The judicial system inefficiency is a major obstacle to investment and economic growth in Benin. Only 8% of commercial cases filed are settled within a year. The World Bank recently rated Benin as being one of the most difficult places worldwide to enforce a contract. This project will strengthen the institutional environment for business and investment by improving the ability of the judicial system to resolve claims. Increases are expected in the number of cases settled by the First Instance courts, the number of cases handled by the Arbitration Centre, and the number of registered enterprises.

Access to Markets (US$169, 447 million)

The importance of Port of Cotonou to Benin’s economy has been increasing, while its competitiveness has been steadily decreasing. This project will promote market access by improving port operations and infrastructure. Specifically, it aims at improving port performance and security, expand capacity, and reduce costs. It is expected to reduce delays and increase imports and exports.

Secure access to land to facilitate more investment in this sector

Impacts

The programme is expected to benefit five million Beninese and lift an estimated 250,000 out of poverty by 2015. It went through one of the most robust consultative and participatory processes to date in an MCA-eligible country. Benin held several meetings with various stakeholders as well as radio and television programs to broadly present the proposal and garner feedback from intended beneficiaries.

Through its outreach communication activities, the programme managed to involve in each stage of its implementation, the populations in the various reforms initiated. Its participatory nature is important to MCA-Benin in its compulsory search for interaction with the public and anchorage in the rural communities.

Sustainability will be ensured through training, capacity building, policy reforms and institutional changes. The Land and Justice projects contain core training, information and education campaigns to build public knowledge on respective issues. The Financial Services project which is expected to have few adverse environmental and social impacts, will incorporate training, technical assistance, and services on strategies to avoid risks and enhance the positive impact of access to financial services. The Land project will have positive social effects and foster land stewardship. Both projects are gender-based.

The Justice project has the potential for modest adverse environmental and social impacts from the construction of a legal information centre and courthouses. The programme started on October 6, 2006. Environmental activities carried out to ensure sustainability of activities include:

• An environmental procedure for the MCA-Benin programme;

• A category B environmental and social assessment framework.

The Markets project, however, requires a comprehensive Environmental and Social Impact Assessment (ESIA). Preliminarily, initial technical studies were conducted to assess the various alternatives to meet the needs at Port of Cotonou.

Furthermore, engineering, economic, environmental and social feasibility studies were carried out. Agence Béninoise pour l’Environnement validated the category A environmental and social impact study and the Ministry of the Environment issued the Environmental Compliance Certificate. The environmental and social management plan (ESMP) is provided for in contractors’ contracts.

The MCA-Benin is an innovative programme where the environment is a requirement. Less than two years before completion, it has reached its cruising speed. The various activities initiated under each or the projects herald a good future and the fight for effective improvement of the business climate in Benin can nowadays give confidence to national and international investors.

Millennium Challenge Account
(MCA-Benin)
W: www.mcabenin.bj