The economic rise of Cotonou and its impact on West Africa

Nestled on the shores of the Gulf of Guinea, Cotonou, the economic capital of Benin, stands out as a strategic hub for West Africa. Renowned for its deep-water port, one of the most active in the region, the city plays a pivotal role in regional and international trade, connecting the economies of the West African hinterland, including Niger, Burkina Faso, and Mali, to global markets.

Cotonou: An Economic Capital at the Heart of West Africa

Benin’s economy, driven by a vision of diversification and regional integration, has emerged as a model of resilience and growth in sub-Saharan Africa. Cotonou embodies this momentum, attracting significant investments in port infrastructure, industrial zones, and logistical services. These efforts not only enhance Benin’s competitiveness but also strengthen economic integration within ECOWAS, making the city a key player in intra-African trade.

While regional challenges such as security and infrastructure remain, Cotonou continues to assert itself as a catalyst for development, symbolising the ambition and future of West Africa within a rapidly evolving global economy.

Key Figures of Benin’s Economic Growth

GDP Growth and Recent Foreign Investments

Benin is showcasing one of the most dynamic economic trajectories in West Africa, driven by robust growth and ambitious structural reforms. In 2023, real GDP growth reached 6.4%, continuing the positive trend initiated in 2022 with a growth rate of 6.3%. These performances, among the highest in the region, highlight the gradual diversification of an economy historically reliant on cotton and its improved resilience to external shocks. (Source: INSTAD)

Foreign direct investment (FDI) further reflects the country’s growing attractiveness. In 2023, FDI accounted for 1.6% of GDP, with projections indicating a rise to 1.8% by 2028, supported by a continually improving business environment. The Beninese government has implemented key reforms, such as streamlining administrative procedures and offering tax incentives, to encourage foreign capital. The FDI stock, valued at $3.045 billion in 2023, represents approximately 17.5% of GDP, demonstrating strong international investor confidence. (Source: Agence Adocc)

This economic success is accompanied by massive investments in infrastructure, particularly in the Port of Cotonou, which handles nearly 80% of the country’s maritime trade and plays a crucial role in regional commerce. With the launch of new industrial zones and the modernization of transport corridors, Benin is positioning itself as a strategic link in West Africa’s logistical chain.

However, sustaining this momentum will require addressing structural challenges, particularly in education, healthcare, and governance. Tackling these issues will help consolidate economic gains while ensuring sustainable and inclusive development.

Infrastructure Development and Flagship Projects

Infrastructure development is the backbone of Benin’s economic transformation, with strategic projects reinforcing the country’s position as a logistics and industrial hub in West Africa.

The Port of Cotonou (PAC), a key driver of regional trade, is undergoing an ambitious modernization program dubbed “The 12 Works of PAC.” This plan includes the construction of Terminal 5, the expansion of the port basin, the renovation of the northern quays, and the creation of a 40-hectare logistics zone. These projects, representing an investment exceeding 450 billion CFA francs, aim to enhance the port’s competitiveness by facilitating access to international and regional markets. (Source: Agence Ecofin)

Supporting this ambition, the African Development Bank (AfDB) granted a €80 million loan in July 2023 to fund the PAC’s expansion, including the construction of a new container terminal. These efforts are already yielding results: in the third quarter of 2024, the PAC recorded a significant 19.9% increase in cargo traffic, reaching 2.51 million tonnes—a tangible sign of the positive impact of ongoing investments. (Source: Agence Ecofin)

The Glo-Djigbé Industrial Zone exemplifies Benin’s commitment to industrialization. By supporting the export of processed goods through the PAC, the zone strengthens local value chains and export revenues. Simultaneously, a vast program to rehabilitate 15,000 km of rural roads, launched in November 2024, is improving access to agricultural areas and optimizing the transport of goods.

A Favourable Environment for Investment in Benin

Benin is emerging as an attractive destination for investors, thanks to its transforming economic framework and governance focused on modernisation.

Since 2018, the government has implemented over fifty structural reforms to simplify business creation, improve access to electricity, streamline construction permits, and ease tax payments. These initiatives have strengthened the business environment, positioning the country as a model of economic attractiveness.

The 2024 Finance Bill continues this momentum, with a 12.8% increase in budgetary resources compared to 2023, driven by a Medium-Term Revenue Mobilisation Strategy (MRMT). This plan aims to boost annual revenue by 0.5% of GDP through broadening the tax base, digitising fiscal systems, and improving tax compliance. (Source: COFACE)

Benin’s political stability further enhances its appeal. In October 2024, the credit rating agency S&P maintained the sovereign rating at ‘BB-’ while upgrading the outlook from ‘Stable’ to ‘Positive,’ underscoring economic actors’ confidence in the country’s development trajectory.

Sectoral Opportunities in Benin: Thriving Markets

Benin offers a wide range of investment opportunities in strategic sectors, driven by a diversified economic vision and structural reforms. Here’s a closer look at the key industries shaping the country’s future.

Energy: A Transition Underway

Benin’s energy sector is undergoing a transformation aimed at reducing energy dependence and diversifying sources. The country is focusing on renewable energy, with flagship projects like the Pobè solar park, a 25 MW facility funded by the World Bank. Investments in electrical infrastructure are also improving reliable access to energy for households and businesses. The potential in solar and wind energy remains significant, supported by an increasingly attractive regulatory framework.

Agro-Industry: Enhancing Local Value Chains

Benin’s agro-industry is thriving, driven by initiatives to increase local processing of agricultural products. Cotton, the leading export product, is now being transformed through spinning and textile units. Other sectors, such as pineapple and shea, are experiencing rapid growth thanks to support programs for small agricultural businesses. These efforts are strengthening value chains and meeting growing demand for processed products.

Digital Economy: A Catalyst for Innovation

The digital economy is a key driver of Benin’s economic modernisation. Thriving tech startups are supported by hubs like the Cotonou Digital Centre. The government is also investing in digital inclusion projects to expand internet access, particularly in rural areas. With rising internet penetration rates and growing demand for digital services, this sector holds exponential growth potential.

Infrastructure and Construction: Building for the Future

Rapid urbanisation and the demand for quality infrastructure present substantial opportunities in construction and public works. National priorities include modernising transport corridors and ports and building affordable housing. Projects such as the rehabilitation of the Abomey-Calavi – Bohicon road highlight the central role of this sector in the country’s development.

Tourism: An Undervalued Heritage

Benin is leveraging its rich cultural and natural heritage to position itself as a key tourist destination. Initiatives like “The Route of the Amazons,” celebrating the history of the Dahomey warriors, and the rehabilitation of national parks like Pendjari are attracting a growing number of visitors. With developing tourism infrastructure and significant potential in eco-tourism, this sector offers opportunities for sustainable and responsible investments.

Choiseul Africa Summit 2024: A Strategic Rendezvous in Cotonou

The upcoming Choiseul Africa Summit, co-organised with the Republic of Benin, will take place on 26–27 February 2025 at the Sofitel Marina Hotel & Spa in Cotonou. This strategic gathering will bring together around 350 economic leaders from Benin and the sub-region, along with talents and experts from across the continent, to discuss opportunities for collaboration in key sectors of Benin’s and the region’s economies. 

What are the drivers for optimising value chains through infrastructure and digital technology? How can flagship products such as cotton and shea be processed locally to enhance regional competitiveness?

What solutions are needed to train a skilled workforce and meet the needs of strategic sectors? Accelerating access to finance: what strategies are needed to unleash innovation and support SMEs?

And in the face of rapid urbanisation, which models for sustainable and connected African cities, are capable of meeting the challenges of the 21ᵉ century?

These themes will be at the heart of the panels at the Choiseul Africa Summit, which will explore concrete solutions to build a competitive and inclusive future for Benin and Africa.

This Summit provides a unique opportunity to delve into critical issues, discover actionable initiatives, and forge impactful partnerships for the economic development of Benin and the region. Join us in Cotonou for this strategic event. Pre-registration is now open: https://event.inwink.com/choiseul-africa-summit-cotonou/en/