- Benin will be able to further implement key areas under its poverty reduction strategy, thanks to the approval of the US$ 30 millioin by the World Bank today.
Announcing the grant approval today in Washington, the World Bank Group Board of Executive Directors said the Fifth Poverty Reduction Support Grant for the Republic of Benin, will support the implementation of the government’s reform agenda, which include improving the regulatory framework and policy environment for private investment and infrastructure; pursuing progress towards the Millennium Development Goals (MDGs) by improving access to basic services and ensuring greater efficiency of public expenditures on human capital formation; and promoting better governance, through public financial management reforms.
The World Bank board however noted that, the West African country, with a population of just over 8 million and a per capita income of US$570, Benin, has seen improvements in the past two decades with important structural reforms puts in place and relative growth rates achieved. "Notwithstanding these achievements, poverty remains widespread and the economy remains poorly diversified and vulnerable to external shocks and it is likely that not all of the MDG targets will be met by 2015," the board said in a statement.
Benin is ranked 163rd out of 179 countries on the UNDP’s Human Development Index, and is classified a lower-income country.
The country's economy heavily relies on the agricultural sector, in particular cotton, and transit trade with Nigeria. The agricultural sector is said to account for about 32 percent of GDP and provides nearly 70 percent of the country’s workforce while cotton is the major primary export commodity with about 40 percent of total exports over 2006-07.
According to the World Bank figures, transit trade with Nigeria is estimated to represent between 6.5 and 7.5 percent of GDP and explains the vulnerability of the economy to trade policy changes in its neighbouring and main trade partner.
“Economic growth and sustained poverty reduction are unlikely to be achieved without stimulating agriculture and business diversification. This PRSC will be an input to the many reforms supporting improvements in the business environment and private sector-led growth,” Nancy Benjamin, Co-Task Leader, said following the grant approval, also underscoring the need for economic diversification in Benin.
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