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AFRICAN DEVELOPMENT FUND
BENIN
ENERGY SECTOR BUDGET SUPPORT PROGRAMME - PHASE I
(PASEBE I)
RDGW/ECGF/PESD/COTG DEPARTMENTS
March 2017
Translated Document
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TABLE OF CONTENTS
INFORMATION ON THE PROGRAMME ............................................................................................ ii
LOAN INFORMATION ............................................................................................................................. ii
Client Information ........................................................................................................................................ ii
I. INTRODUCTION: THE PROPOSAL ............................................................................................. 1
II. COUNTRY CONTEXT ..................................................................................................................... 1 2.1. Political Situation and Governance Context ..................................................................... 1 2.2. Recent Economic Trends, and Macro-economic and Budgetary Analysis .......................... 2
2.3. Economic Competitiveness ............................................................................................. 3 2.4. Energy Sector Review .................................................................................................... 3 2.5. Public Finance Management ........................................................................................... 5
2.6. Inclusive Growth, Poverty Situation and Social Context ................................................... 5
III. GOVERNMENT’S DEVELOPMENT PROGRAMME ................................................................. 6 3.1. Government’s Development Strategy and Medium-Term Reform Priorities ...................... 6 3.2. Obstacles to the National/Sector Development Programme Implementation ...................... 6
3.3. Consultation and Participatory Process ............................................................................ 6
IV. BANK SUPPORT FOR THE GOVERNMENT’S STRATEGY ..................................................... 7 4.1. Linkages with the Bank Strategy ..................................................................................... 7 4.2. Compliance with Eligibility Criteria ................................................................................ 7
4.3. Collaboration and Coordination with the Other Partners ................................................... 7 4.4. Linkages with Other Bank Operations ............................................................................. 7 4.5. Analytical Underpinnings ............................................................................................... 8
V. PROPOSED PROGRAMME ........................................................................................................... 8 5.1. Programme Goal and Objective ...................................................................................... 8 5.2. Programme Components ................................................................................................ 9 5.3. Policy Dialogue ........................................................................................................... 11
5.4. Loan Conditions .......................................................................................................... 11 5.5. Good Practice Principles for the Application of Conditionality ........................................ 12
5.6. Financing Requirements and Mechanisms ..................................................................... 12 5.7. Application of Bank Group Policy on Accumulation of Non-Concessional Debts ............ 12
VI. PROGRAMME IMPLEMENTATION .......................................................................................... 13 6.1. Programme Beneficiaries .............................................................................................. 13 6.2. Impact on Gender, the Poor and Vulnerable Groups ....................................................... 13
6.3. Environmental Impact and Climate Change ................................................................... 13 6.4. Impact in Other Areas .................................................................................................. 13
6.5. Implementation, Monitoring and Evaluation .................................................................. 14 6.6. Financial Management and Disbursement ..................................................................... 14
VII. LEGAL DOCUMENTATION AND AUTHORITY ...................................................................... 15
7.1. Legal Documentation ........................................................................................................................ 15
7.2. Conditions for Bank Intervention ....................................................................................................... 15
7.3. Compliance with Bank Group Policies ............................................................................................... 15
VIII. RISK MANAGEMENT ................................................................................................................... 15
IX. RECOMMENDATION ................................................................................................................... 16
Annex I: Benin – Energy Sector Budget Support Programme in Benin – Phase I (PASEBE I): Matrix
of Measures
Annex II: Note on Relations with the IMF
Annex III: Agreement with Benin on an Extended Credit Facility Arrangement
Annex IV: Selected Macro-Economic Indicators
Annex V: Table of Bank Operations in Benin under CSP 2012-2016
i
CURRENCY EQUIVALENTS
(September 2016)
UA 1 = CFAF 821.62
UA 1 = EUR 1.25
UA 1 = USD 1.39
FISCAL YEAR 1 January - 31 December
ACRONYMS AND ABBREVIATIONS
ADF African Development Fund
AFD French Development Agency
AfDB African Development Bank
BCEAO Bank of West African States
BOAD West African Development Bank
CEB Communauté Electrique du Bénin (Benin Electricity Community)
CEET Compagnie Energie Electrique du Togo (Togo Electric Energy Company)
CPIA Country Policy and Institutional Assessment
CSP Country Strategy Paper
DGE General Directorate of Energy
EIBD ECOWAS Investment and Development Bank
EU European Union
GDP Gross Domestic Product
HDI Human Development Index
IMF International Monetary Fund
JICA Japanese International Cooperation Agency
MCA-Benin Millennium Challenge Account - Benin
MCC Millennium Challenge Corporation
MDG Millennium Development Goal
MEF Ministry of the Economy and Finance
MEME Ministry of Energy, Mines and Water Resources
PBA Performance-Based Allocation
PPA Power Purchasing Agreement
PRGS Growth and Poverty Reduction Strategy
RMC Regional Member Country
SBEE Société Béninoise d’Energie Electrique (Benin Electric Power Company)
SME Small and Medium-Sized Enterprises
TFP Technical and Financial Partner
TGFO AfDB Field Office in Benin
UA Unit of Account
UNDP United Nations Development Programme
VAT Value Added Tax
WAEMU West African Economic and Monetary Union
WAPP West Africa Power Pool
WB World Bank
ii
INFORMATION ON THE PROGRAMME
INSTRUMENT : Sector Budget Support
PBO DESIGN MODEL : Programme Support Operation
LOAN INFORMATION
Client Information
BORROWER : Benin
ORGANE D’EXÉCUTION : EXECUTING AGENCY : Ministry of the Economy and Finance
Financing Plan
Source Amount (UA)
2017
Amount (CFAF)
2017
Amount (UA)
2018
Instrument
ADF-13
12.02 million
9.88 billion
To be defined
Loan
ADF (resources
cancelled)
7.9 million
6.47 billion
To be defined
Loan
TOTAL COST 19.92 million 16.35 billion To be defined
Key ADF Loan Information
Loan Currency Unit of Account
Interest Rate 2.8572%
Interest Rate Margin Not Applicable
Service Commission 0.75% per year on loan amount disbursed but not yet repaid
Commitment Fee 0.50% on undisbursed loan amount starting 120 days after signature
of the Loan Agreement.
Other Charges None
Tenor 40 years
Grace Period 5 years
Implementation Schedule – Key Milestones (Expected)
Concept Note Approval September 2016
Appraisal September 2016
Programme Approval March 2017
Effectiveness April 2017
Single Tranche Disbursement April 2017
Completion December 2017
iii
PROGRAMME SUMMARY
Programme
Overview
Programme Name : Energy Sector Budget Support Programme in Benin – Phase I (PASEBE I)
Expected Outcomes: Support for efforts made by the Government of Benin towards regular supply of electricity in the
short term, by ensuring fuel supply to independent producers; improvement of sector governance by supporting reforms
that will in the medium term enable Benin to increase its national electricity production and have a tariff system that reflects
the real costs of electric power.
Overall implementation schedule: Sector budget support – programme support operation : March 2016 – December 2017
Programme cost: UA 19.92 million
Programme
Outcomes
The expected programme outcomes are: (i) stabilization of electricity production; and (ii) efficient management of the
electricity sub-sector.
Compliance with
Bank Priorities
The programme is consistent with the Bank’s Country Strategy Paper (CSP 2012-2016) for Benin whose mid-term review
took place in 2014, especially its two pillars: (i) Development of support infrastructure for production and competitiveness,
and (ii) Promotion of good governance. It is also in line with the first of the Bank’s High 5 priorities (“Light up and power
Africa”), and contributes to two other priorities: "Industrialize Africa" and "Improve the living conditions of people in
Africa". Furthermore, it is in keeping with the Bank’s Strategy for the New Deal on Energy for Africa (2016-2025),
particularly the creation of a conducive environment for reforms.
Needs Assessment
and Rationale
The demand for electricity in Benin has been growing steadily due to sustained economic growth (over 5% in 2015),
population growth and galloping urbanization. The sector’s difficulties over the past few years have been exacerbated
particularly by frequent selective power cuts. These power cuts are due to: (i) the drop in quantities of power imported
from the main supplier countries (Cote d’Ivoire, Ghana, and Nigeria) which can no longer supply the CEB (Benin and
Togo) with the contractual quantities of energy since they now have to prioritize the steadily growing demand at home, as
well as CEB’s unpaid bills owed to these external suppliers; (ii) shortage of fuel supplies to Independent Power Producers
which in 2015 accounted for nearly 90% of the electricity generated locally in Benin. This national production helped to
satisfy nearly 8% of local electricity demand in 2015, with the remaining 92% provided by the CEB (imported and locally
produced community hydroelectric and thermal power); and (iii) the lack of significant investments to rehabilitate SBEE’s
production and distribution plants. With these difficulties, demand far exceeds supply, hence the frequent and increasingly
longer power cuts which hurt economic activities, particularly those of the informal sector and very small, small and
medium-sized enterprises with very little means to buy back-up generators and obtain regular supply of fuel. PASEBE I
comes within this context to offer special support to Benin’s Government to help it reduce selective power cuts and
implement actions to provide long-term resolutions to the crisis in the electricity sub-sector.
Harmonization This operation is designed jointly with the other Technical and Financial Partners (TFP). It supplements the budget support
operation that the World Bank is preparing for Benin and which targets actions in the electricity sub-sector. The operation
is in line with the actions of the Millennium Challenge Corporation (MCC) which, under the second Compact approved in
September 2015, will support Benin to improve electricity sub-sector governance, increase energy production, and
strengthen distribution facilities. The Bank’s budget support will supplement the European Union’s efforts aimed at
strengthening the Electricity Regulatory Authority.
Bank’s Added Value The Bank is one of the key partners of the energy sector in Benin. Over the past few years, it financed several operations
in the electricity sub-sector, including the multinational NEPA (Nigeria) – CEB (Benin-Togo) Electricity Grid
Interconnection Project, the Project to Electrify 17 rural centres, and the Rural Electrification Project II. These three
projects have all been completed. The Bank also financed the Ghana-Togo-Benin Interconnection Project through a 330-
kV Line which is an essential link of the WAPP coastal backbone linking Nigeria to Cote d’Ivoire. This ongoing project
will be completed at end-2017. At national level, the Bank is preparing a Project to Restructure and Strengthen the Sharing
and Distribution System of Société Béninoise d’Energie Electrique (SBEE) which will be approved in 2017. Given the
increasing scope of the Bank’s energy sector interventions, this programme is relevant because it will help to improve the
overall electricity sub-sector governance framework so as to facilitate implementation and guarantee the impact of the
ongoing and future interventions of the Bank and other development partners in Benin.
Contributions to
Gender Equality
and Women’s
Empowerment
The programme will help to improve the living conditions of the population, and hence of women who make up 52% of
the population of Benin. It will, in particular, benefit 31% of the population who will have access to electricity, especially
women who are very active in the informal sector (petty trading, catering, handicraft, and processing of food products) and
have very limited means to procure back-up power generators.
Policy Dialogue
and Related
Technical
Assistance
This operation will also help to consolidate dialogue with Benin’s Authorities for the implementation of measures that can
mitigate constraints on the supply of stable electric power. Dialogue with the Government will be through supervision
missions and regular meetings between the Government and the Country Economist present in Benin and TGFO. Dialogue
will also rely on the Energy Thematic Group in which AfDB participates. This will help to strengthen synergy with other
partners’ interventions, especially the energy-sector based programme of MCA-Benin, which is the executing agency of
MCC. Dialogue will be underpinned by analytical works and situational reports that will be produced with TFP support to
improve the performance of the sector.
iv
RESULTS-BASED LOGICAL FRAMEWORK
I.
Project Country/Name: Energy Sector Support Programme in Benin – Phase I (PASEBE I)
Project Goal: Increase energy supply so as to create conditions for inclusive economic growth and improve sector governance
RESULTS CHAIN PERFORMANCE INDICATORS MEANS OF VERIFICATION RISKS/
MITIGATION
MEASURES
Indicator
(including CSIs)
Baseline Situation Target 2017
IMP
AC
T
Inclusive and
sustainable economic
growth as a result of
regular power supply
GDP growth rate 5.0 % in 2015 6% in 2017
Reports of the Ministry of the
Economy and Finance
Risks : (i) Macro-
economic; (ii)
fiduciary
Mitigation Factor
and Measures:
- Rigour in public
finance management
- Rigour and
compliance with
public procurement
procedures
- Bank monitoring
missions
% of urban households with access
to electricity 58% in 2015 60% in 2017
Report of the Ministry of Energy,
Mines and Water Resources
Reports of DGE % of rural households with access
to electricity 7% in 2015 8% in 2017
OU
TC
OM
E
S
Power services
improved Power deficit 90 MW in 2016 0 MW
Reports of the Ministry of
Energy, Mines and Water
Resources; SBEE and DGE
Reserve capacity 0 MW in 2016 60 MW
OU
TP
UT
S
Output 1 : Support Regular Power Supply
Component 1:
Support for regular
power supply
Significant increase in national
electric power supply
140 MW
350 MW (+150 MW from
leased generators +60 MW of
additional imports from
Nigeria)
Signing of generator lease
agreement to supply 150 MW
Signing of contracts to import 60
MW from a Nigerian Independent
Power Producer (IPP)
An authorization from the High
Inter-State Authority of the
Electricity Community of Benin
to import 60 MW
Output 2: Improve Sector Governance
Component 2.1 :
Strengthening of the
Electricity
Regulatory Authority
(ARE)
ARE’s recurrent budget Irregular State
budget allocation
(CFAF 500 million
in 2014; 120
million in 2015
Joint decree of the Ministry of
Energy and the Ministry of the
Economy and Finance
instituting a fee to cover the
operating costs of ARE
Reports of the Ministry of
Economy and Finance
ARE report
v
Revision of electrical Decree No.
2009 – 182 of 13 May 2009
amended in 2017 to give ARE the
power to approve tariffs
- Decree revised Publication of decree
Component 2.12 : Streamlining of
SBEE management
Appointment of a new management
team and new members of SBEE
Board of Directors
Interim
management team
established
Officials appointed through
competition
Members of the Board of
Directors appointed in
accordance with the
recommendations of the
consultant recruited by MCA-
Benin
Reports of the Ministry of
Energy,
SBEE reports
State arrears owed to SBEE - State-SBEE crossed debts
reconciled, and the balance
known
Proposed arrears settlement
plan
Statement of reconciliation of
SBEE’s crossed debts
Report of the Ministry of Energy
KE
Y
AC
TIV
ITI
ES
Key Activities:
- Signing of Loan Agreement and fulfilment of conditions precedent to the intervention of the African
Development Fund
- Implementation of adopted measures, Quarterly progress reports, Bank supervision reports, and the
Programme Completion Report
- ADF Loan : UA 19.92 million
1
I. INTRODUCTION: THE PROPOSAL
1.1. Management hereby submits this proposal concerning the granting of an ADF loan of UA 19.92
million to Benin to finance the Energy Sector Budget Support Programme in Benin – Phase I (PASEBE
I). PASEB I is the first phase of a programme-based budget support operation. This approach allows for
greater aid effectiveness and better alignment with the country’s development policies in order to create
conditions for inclusive sustainable growth. This multi-year framework also helps to build a medium-term
platform for dialogue on key reforms aimed at increasing energy supply in the country. The programme’s
inter-sector approach will help to create synergy between the Bank’s Energy Department and Budget Support
Department to ensure better complementarity.
1.2. The programme aims to improve electric power supply and electricity sub-sector governance in
order to create conditions for inclusive and sustainable economic growth. By providing immediate response
to curb selective power cuts, the programme will have a positive impact on economic growth and thus contribute
to improving the population’s living conditions.
1.3. PASEBE I is consistent with the guidelines of the Governance Action Plan (GAP 2016-2021),
approved in October 2016 and focusing mainly on the improvement of governance and promotion of
growth-support infrastructure. GAP 2016-2021 gives priority to strengthening energy capacity and the
Government seeks provide the country adequate means to obtain quality energy services in sufficient
quantity and under optimum conditions of cost and supply security. The objective is to create conditions
conducive to robust and sustained growth that can generate a multiplier effect on improvement of the
incomes and living standards of the population. PASEBE I is also consistent with the energy sector
rehabilitation plan recently adopted by the Government. The choice of budget support operation stems mainly
from the need to provide an urgent response to the crisis in the electric power sub-sector.
1.4. The programme is consistent with the Bank Group’s Ten-Year Strategy (2013-2022) and
contributes to achieving three of the five strategic objectives (High Fives) namely: (i) Light up and power
Africa; (ii) Industrialize Africa; and (iii) Improve the living standards of the people of Africa. It will
contribute to the implementation of the Bank’s Energy Sector Policy (approved in 2012), which targets
a two-fold objective: (i) support efforts made by Regional Member Countries (RMC) to provide their
populations and production sectors with access to modern reliable energy services at affordable cost;
and (ii) help RMCs to develop an energy sector that is socially, economically and environmentally
viable. Another rationale for the Bank’s financing proposal is its alignment with the Bank’s New Deal
on Energy for Africa (2016-2025) approved in 2016 to achieve universal access to energy by 2025. By
aiming to appoint SBEE officials through competition and strengthen ARE so as to empower it to set
electricity rates, the project aligns with the strategic theme of the New Deal on Energy for Africa which
is "Creating a favourable policy framework". In addition, the objective of preparing a plan for the
Government to clear its arrears to SBEE aligns the project with the theme "Strengthening the capacity of
electricity companies to guarantee success". The programme is also consistent with the policy on programme
support operations.
II. COUNTRY CONTEXT
2.1. Political Situation and Governance Context
2.1.1. The socio-political climate in Benin in 2016 is marked by the recent elections that changed the
country’s political configuration. The presidential elections held in March 2016 allowed for a peaceful
change at the helm of State. This shows that democracy and stability are being consolidated in Benin,
and this will help to usher in a conducive environment for growth.
2.1.2. Although the country is pursuing reforms in economic and financial governance, progress
remains inadequate. The implemented reforms mostly concern the new finance laws organic
2
framework (LOLF), as well as the modernization of the tax/customs administrations and public
procurement system. According to Transparency International, the country’s corruption perception
index stood at 37 points in 2015 against 39 in 2014 (on a scale from 0 (Very Corrupt) to 100 (Least
Corrupt)).
2.1.3. As regards Benin’s procurement system, normative progress was made in the reform of public
procurement procedures and transposition of WAEMU Directives on public procurement. The reviews
conducted by the Bank in 2010 and 2014 on the use of the national public procurement system concluded
that the national system largely complies with international standards and the Bank Policy thanks to the
transposition of Directives Nos. 4 and 5 of WAEMU.
2.2. Recent Economic Trends, and Macro-economic and Budgetary Analysis
2.2.1. Since 2012, the country has recorded economic growth rates above 5%, sustained by
agricultural production and trade. Growth slowed down in 2015 when rates fell from 6.5% in 2014 to
5% in 2015, due mainly to the wait-and-see attitude shown by business operators because of elections
in Nigeria and Benin, and the over 30% drop in cotton production due to a dry spell during the planting
period. In the first quarter of 2016, economic activity was marked mainly by the holding of presidential
elections in Benin, the persistence of power outages and slowdown of economic activity in Nigeria.
Growth forecasts for 2016 were thus revised downward to 5% as against initial forecasts of 5.8%.
Inflation has remained below the community threshold of 3% since 2013, due to the steady fall in the
prices of food products and transportation.
2.2.2. With respect to budget management, it was marked over the past few years by an aggravation
of the budget deficit, excluding grants, which rose from 3.5% of GDP in 2013 to 8.5% of GDP in 2015.
This increase is due to lower customs revenue as a result of shrinking re-export activity and to the over
30% increase in public spending between 2013 and 2015. Public spending increased because of
resources committed for organization of different elections in 2015 and 2016, as well as the over 30%
increase in capital expenditure to accelerate public projects in 2015.
2.2.3. Debt: Although the country’s debt level rose in 2015, it remains low, judging from the debt
sustainability analysis jointly conducted in 2015 by the IMF and World Bank. According to national
statistics, the public debt level (domestic and external) was estimated at 41.6% in 2015 as against 31%
in 2014 and 25.4% in 2013. The increased debt level in 2015 stems mainly from recourse to the public
securities market and direct bank loans to finance certain projects. Each year, the Government prepares
a public debt strategy paper attached as Annex to the Finance Law. The strategy for 2017-2021
prioritizes recourse to concessional resources from Benin’s conventional donors, a gradual increase in
semi-concessional financing from new financial partners, and the mobilization of limited amounts of
non-concessional borrowings on a case-by-case basis to finance profitable projects. Such commitment
is guarantee that the debt will be kept under control so as not to hamper the country’s development. The
country is discussing with the IMF to conclude a programme which could start before end-2016.
2.2.4. Trade: Benin’s external trade is still marked by a structural deficit of its external current
account and weak exports diversification, reflecting the low level of agricultural and industrial
development. In 2015, the deficit of its current external account stood at 7.1 % of GDP as against 7.2%
in 2014.
2.2.5. The macro-economic prospects are based on growth, which averaged about 6% over the 2017-
2019 period, thanks to higher agricultural production, infrastructure spending and fewer selective cuts
in electric power distribution. The economic policy guidelines for the coming years are also consistent
with the framework for achieving the Sustainable Development Goals (SDGs) by 2030. However, the
prospects remain contingent on security risks in the West African sub-region and the slowdown of
economic activity in Nigeria linked to the drop in oil prices. Climatic risks are also significant, as seen
3
in recurrent floods, pockets of drought, and delays in the first rains, as was the case in 2015.
2.3. Economic Competitiveness
2.3.1. Despite efforts made by the country, its economic competitiveness remains low.
According to the 2015-2016 Global Competitiveness Report, Benin was ranked 122nd out of 140
countries, with an overall competitiveness score of 3.5 on a scale of 1 to 7. The factors that most hamper
Benin’s economic competitiveness are inadequate infrastructure and technological development,
difficult access to credit, corruption and administrative red tape. Thanks to major reforms aimed at
improving the country’s competitiveness and business climate, Benin was ranked among the ten best
reforming countries in the World Bank’s 2015 and 2016 Doing Business Reports with respect to the
business climate. In the 2017 report, the country was ranked 155th out of 190 countries. The country
gained 60 positions the same year, moving from the 117th position to the 57th for the starting a business
criterion. Although the private sector has become more dynamic over the past few years, fostered by the
country’s closeness to Nigeria, the dynamism nevertheless remains limited and dominated by the
informal sector. The difficult access to factors of production (power, water, internet, and land) and
financing is still a challenge that the country needs to tackle. Benin’s economy can become highly
competitive by implementing robust energy sector reforms, along with transformative projects. Indeed,
local and foreign investors place a high premium on access to energy.
2.4. Energy Sector Review
2.4.1. Benin’s energy sector is marked by low per-capita power consumption, high dependence
on external sources, a predominance of fuel biomass (fire wood, charcoal and plant wastes) and the
population’s low access to modern energy sources (petroleum products and electricity). Per-capita
electric power consumption is very low and stands at around 42 kWh/inhabitant/year. The country’s
energy supply is totally externally-sourced, which exposes it to external shocks over which it has no
control. Indeed, Benin imports 100% of the petroleum products it consumes.
2.4.2. SBEE obtains its electric power supply primarily from the Benin Electricity Community
(CEB), which provided nearly 92% of Benin’s energy needs in 2015, as against 97% in 2014. The
quantity of electric power imported by SBEE from CEB rose to 1,100GWh in 2015, representing a
0.84% drop compared to 2014 when it was 1,109 GWh. So in 2015, SBEE supplied from its own
production about 9% of domestic demand for electric power. The electricity produced by SBEE’s
generation plants rose sharply in 2015 to 103 GWh as against 30 GWh in 2014, corresponding to a 237%
increase. In 2015, 90% of this locally-produced electricity using mainly thermal plants (diesel/fuel) was
ensured by independent producers under two generator lease contracts totalling 80 MW that expired at
end-September 2016. Current peak demand is estimated at 230 MW, while available supply is below
140 MW, making a shortfall of 90 MW. The electricity access rate at national level remains low at 31%
(58% in urban centres and 7% in rural areas) as against an average of 40% in Africa.
2.4.3. Benin’s main electric power suppliers are Nigeria, Cote d’Ivoire and Ghana through the
Benin Electricity Community (CEB). Due to growing internal demand in these supplier countries
today, these countries are not always able to provide CEB with the contractual quantities and voltages
of energy. Apart from the supplier countries’ internal constraints, imports have also dropped because
CEB has difficulties paying its external suppliers with whom it no longer enjoys the status of privileged
client. This drop in imports has resulted in the resurgence of selective power cuts which affects Benin
and its economy, and might create social unrest.
2.4.4. The electricity sub-sector in Benin is divided into two segments. The first segment is the
CEB (the common entity for Benin and Togo) governed by an International Agreement instituting the
Benin-Togo Electricity Code signed on 27 July 1968. It has exclusive rights to undertake energy
transmission activities and import electric power from neighbouring countries. Consequently, CEB is
4
the sole entity authorized to buy electric power from the regional electricity market to meet the needs of
the two countries. Since the revision of the Benin-Togo Electricity Code on 23 December 2003, the
electricity production segment is now open to independent producers. The second segment is controlled
by Société Béninoise d’Energie Electrique (Benin Electric Energy Company, SBEE) whose main
mission is to distribute and market electric power in Benin. It also has thermal generation facilities with
an installed capacity of 38 MW, nearly 80% of which is available (broken down or obsolete generators).
2.4.5. The sector’s difficulties have worsened over the past few years, and the issue of regular
supply and cost of electric power increasingly seems to be a major obstacle to the country’s
inclusive and sustainable growth. Benin faces strong demand for electric power due mainly to
expanding economic activities and population growth. In 2015, national demand for electric power
increased by over 5%, while the available supply declined by nearly 1%. This situation leads to multiple
interruptions in electricity supply due to insufficient supply (CEB and local production), which heavily
penalizes the development of socio-economic activities.
2.4.6. To remedy this electric power shortage, the public authorities have prepared an action
plan with three types of actions: (i) actions to be undertaken immediately and whose effects are
immediate, including those to end selective power cuts before end-2016; (ii) actions to be undertaken
immediately, but whose effects will only be felt in two to three years (2017 – 2018); and (iii) actions to
be undertaken to have generation facilities that meet national demand as from 2019 and improve the
financial situation of the electricity sector stakeholders. Actions to be undertaken immediately have to
do with the signing of contracts with independent producers for the installation of total production
capacity of 150MW and the import of an additional 60 MW from Nigeria (without passing through
CEB). To do that, an exceptional waiver should be granted to Benin by the High Inter-State Council of
CEB to be able it to directly import electric power from neighbouring countries. CEB will make
appropriate arrangements to import the power through its transmission network.
2.4.7. In addition, several other actions have been taken to boost electric power supply over the
medium and long term. These actions will provide Benin with installed capacity of 335 MW by 2019.
Since current supply is not up to 140 MW, the Government has signed a contract with a Finnish firm
for the rehabilitation of several diesel generators in SBEE plants in Porto-Novo, Parakou and Natitingou.
On completion of rehabilitation works expected to start in October 2016 and cover a period of six
months, 15 generators will be rehabilitated and help to recover an additional 30 MW production capacity
by April 2017. Regarding the 80-MW Maria Gleta plant, the Government has published an international
competitive bidding notice to recruit an independent producer for the transformation of the current gas
and A1 power plant into a gas and heavy fuel oil (HFO) power plant, and extension of the plant capacity
to 120 MW. During the selection of the private partner, the Government submitted a request to the Bank
soliciting support from the African Legal Support Facility (ALSF) in the process (contract preparation,
negotiations). The plant rehabilitation and extension will be undertaken by the private partner and should
be completed by end-2018. The plant will run on gas and fuel (dual) under a public-private partnership
(PPP) arrangement for private electricity production for a period of 20 years. The Maria Gleta site will
also house the new 120-MW thermal plant (gas/fuel) under a new project (to cost CFAF 106 billion)
co-financed by IDB, BOAD, BIDC and the Government. Bidding documents for the supply and
installation of plant equipment have already been published. This new plant will be commissioned at
the start of 2019. For its management, SBEE will recruit a private management and maintenance
company. Furthermore, under bilateral cooperation with China, the Benin Government plans to
construct a 120 MW hydropower plant in Dogo Bis by 2022 (Works are expected to start in 2017).
Lastly, MCA-Benin and AFD intend to finance two solar power plants of a total capacity of 65 MW,
with 45 MW and 20 MW respectively.
2.4.8. Other actions are underway to strengthen the main electricity sub-sector stakeholder and
make the environment attractive. These actions include: (i) improvement of SBEE management. The
Government has changed the company’s managing team by appointing an interim team pending the
5
recruitment of the General Manager and Deputy General Manager through competition in the first
quarter of 2017. The Government has also reviewed the missions and profiles of the members of the
company’s Board of Directors. In this regard, MCA-Benin has initiated the recruitment of a consultant
to: (a) prepare the terms of reference of the new SBEE Management Team; and (b) definition of the
composition and profile of the members of SBEE Board of Directors; (ii) strengthen the Electricity
Regulatory Authority (ARE) by amending Decree No. 2009-182 of 13 May 2009 establishing ARE so
as to empower it to approve rates. Furthermore, pending the institution of a levy on electric power sales
for the benefit ARE, the Government undertakes to provide sufficient resources for its operation. In
2015, the Government drastically reduced ARE’s budgetary allocation from CFAF 500 million in 2014
to CFAF 120 million in 2015, an amount that did not meet its operating requirements. This fee is
expected to be instituted after electricity supply is stabilized; and (iii) revision of the tariff structure to
reflect the real costs of electric power and ensuring the economic sustainability of all the value chain
stakeholders. This new tariff structure will be made in such a way as to include a social tranche for low-
income households.
2.4.9. The last SBEE audited reports show that: (i) the turnover for FY 2014 was CFAF 104.738
billion as against CFAF 106.432 billion in 2013, or a 1.59% drop; (ii) the value added in 2014 was
CFAF 26.348 billion as against CFAF 30.585 billion in 2013, or a 13.86% drop ; (iii) SBEE’s trading
results for FY 2014 stood at CFAF 4.022 billion as against CFAF 5.319 billion in 2013; (iv) the net
result for FY 2014 showed a profit of CFAF 4.441 billion as against CFAF 1.825 billion in 2013. SBEE’s
financial situation would have been much better if Government departments had paid their electricity
bills. Indeed, SBEE billed the departments close to CFAF 28 billion in 2014 and 2015, which has not
yet been paid, pending reconciliation of mutual debts and credits between the Government and SBEE.
2.5. Public Finance Management
2.5.1. Public Finance Management: Although the country is pursuing reforms, especially the
transposition of WAEMU guidelines, progress remains inadequate. The outcome of the diagnostic study
conducted under the public finance performance review mechanism (PEFA 2014) indicates weaknesses
in budget credibility and completeness. Given the mounting public deficit and debt observed between
2013 and 2015, the new Government has taken measures to further curb public spending. A finance law
corrigendum (budget) was introduced in June 2016, and the budget deficit for 2016 was revised
downward from 5.6% to 4.9%. Savings were made on public expenditure mainly by grouping Ministries
together, repealing some decrees that grant benefits to civil servants, and abolishing some institutions,
including those attached to the Presidency. The Government also suspended 18 of the 22 pre-financing
contracts for transport projects signed by the previous Government with the private sector. The pre-
financing amount, which accounted for 24% of GDP at end-March 2016, was reduced to 4% of GDP.
Over the past decade, Benin undertook reforms to strengthen public finance control structures and fight
against corruption, particularly by establishing the National Anti-Corruption Authority in 2011. Despite
these efforts, Transparency International’s Corruption Perception Index ranked the country 83rd out of
167 countries in 2015.
2.6. Inclusive Growth, Poverty Situation and Social Context
2.6.1. The social situation is marked by persistent poverty and inequalities, reflecting the
limited inclusive nature of growth. Despite improvements, economic growth cannot keep pace with
the accelerated population growth (population growth rate rose from 3.25% between 1992 and 2002 to
3.5% between 2002 and 2013). Recurrent interruptions in electricity supply impacts more on low-
income households, who depend a lot on informal activities hardest hit by selective power cuts. The
poverty incidence rose from 36.2% to 40.3% of the population between 2011 and 2015, affecting rural
areas (43.3% in 2015) more than urban areas (36.4 %). The unemployment and under-employment
levels remain high, affecting over 50% of the labour force. Modern social protection mechanisms remain
marginally developed, with less than 10% of workers covered by social security and health insurance.
6
In the education sector, progress was made in access, participation, retention and equity. The sector’s
problems have to do with flows management and inadequacy between training opportunities and
development needs. In the health sector, the country could not achieve most of the Millennium
Development Goals (MDGs), except the goal of reducing HIV/AIDS prevalence among pregnant
women. Gender inequalities persist in terms of access to education, resources and decision-making
bodies. Women’s activities are concentrated in rural areas and the informal sector, and are still
confronted by supervision difficulties, absence of guarantees, and access to land and appropriate
financing.
III. GOVERNMENT’S DEVELOPMENT PROGRAMME
3.1. Government’s Development Strategy and Medium-Term Reform Priorities
3.1.1. The Government’s Action Programme (PAG 2016-2021), approved in October 2016, is an
appropriate instrument for inclusive growth and sustainable development. The Government’s overall
objective for the 2016-2021 period is "sustainable economic recovery and social development in Benin".
This programme’s specific objectives are to: (i) create conditions for consolidating democracy and
firmly establishing good governance; (ii) develop the bases for structural transformation of the economy;
and (iii) improve people’s living standards. These specific objectives are broken down into strategic
focus areas, which are in turn operationalized by the Ministry through concrete actions". PAG 2016-
2021 is supported by the 2017-2019 Multi-Year Budget and Economic Programming Document. For
2017, the priority areas are: (i) investment in large-scale agriculture and development of four flagship
sub-sectors: maize-rice-pineapple-cashew nuts; (ii) promotion of the processing industry and
professionalization of handicraft; (iii) development of physical capital and infrastructure (roads, energy,
ICTs, in particular); (iv) promotion of good quality human capital capable of attracting wealth creators;
(v) development of tourism, regional development and vitalization.
3.2. Obstacles to the National/Sector Development Programme Implementation
3.2.1. The difficulties in the energy sector, especially the inability to supply regular electricity,
hampers prospects for inclusive economic growth in the country. National electric power supply is
heavily dependent on imports from Nigeria, Ghana and Cote d’Ivoire, through CEB. These imports
account for close to 92% of the electric power consumed in Benin. The bulk of the remaining 8% is
covered by generators leased from private companies. Ninety percent of the local electric power in 2015
was thus produced by hired private generators. These private companies bill their services very
expensively, including fees for supplying equipment and services, and variable fees for the electric
power produced. Fuel supply is also billed, although this is borne by the Government. The average
production cost of diesel generators is CFAF 200 kWh as against CFAF 60 for energy imported via
CEB. This CFA 200 kWh cost is largely higher than the CFAF 115 kWh average price at which SBEE
sells electricity.
3.3. Consultation and Participatory Process
3.3.1. The programme’s design was the outcome of consultation with stakeholders in Benin,
thereby laying emphasis on the participatory approach and stakeholder/beneficiary involvement
throughout the process. Thus, the Bank’s programme preparation and appraisal missions held
consultations with SBEE, DGE, the Ministries and Government departments concerned with energy
issues, as well as the main Technical and Financial Partners of the sector (the IMF, World Bank, MCA-
Benin, EU, AFD, and KFW). The concerns raised by stakeholders are reflected in this programme. The
concerns focus on more availability of electric power and the financial equilibrium of SBEE.
3.3.2. The participation of national stakeholders and beneficiary groups during the programme
implementation will be in the Energy Thematic Group comprising development partners who meet with
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the Ministry of Energy at least once every year to update and coordinate activities in the electricity sub-
sector.
IV. BANK SUPPORT FOR THE GOVERNMENT’S STRATEGY
4.1. Linkages with the Bank Strategy
4.1.1 PASEBE I is aligned with the Bank’s Country Strategy Paper (CSP 2012-2016) for Benin, whose
mid-term review took place in 2014, especially its two pillars: (i) Development of infrastructure for
supporting production and competitiveness; and (ii) Promotion of good governance. The programme is
also in line with the priorities of the Bank’s Ten-Year Strategy (2013-2022) and the High 5s: "Light up
Africa". In addition, it is consistent with Pillar I: "Public sector management and economic
management" and Pillar II "Sector governance" of the 2014-2018 Governance Action Plan (GAP II). It
will also help to implement Pillar II "Economic empowerment" of the Bank’s Gender Strategy (2014-
2018), as well as with the Bank’s 2014-2019 Strategy for Addressing Fragility and Building Resilience
in Africa, particularly strategic focus No. 2 (Promotion of resilient societies through inclusive and
equitable access to employment, basic services and revenue from natural resources) which considers
the promotion of equitable access to basic economic services, including energy, as a source of resilience.
4.2. Compliance with Eligibility Criteria
4.2.1. Benin fulfils the eligibility criteria for the policy-based reform instrument. The
Government is committed to reducing poverty as reflected in the guidelines of PAG 2016-2021 which
is a continuation of PRGS 2011-2015. Despite poor weather conditions and the economic slowdown in
Nigeria, Benin’s main trade partner, the macro-economic situation remains robust thanks to the support
given by the Authorities to economic activity and budgetary stringency. This is corroborated by the
IMF’s conclusions in its report on Article IV consultations, published in January 2016. As regards
fiduciary assessment, the Country Fiduciary Risk Assessment (CFRA) conducted by the Bank in 2014
showed that the overall fiduciary risk remains substantial, but moderate. Benin has been enjoying
political stability for several years. This stability is confirmed by the holding of democratic presidential
elections in March 2016 in a calm and transparent atmosphere, following which a new President was
elected.
4.3. Collaboration and Coordination with the Other Partners
4.3.1. PASEBE I was designed in consultation with the other donors involved in the energy sector in
Benin. It mainly seeks to supplement the USD 40 million budget support that the World Bank is
preparing for Benin for the 2016-2017 period, targeting actions in the electricity sub-sector, including
better financial viability and instituting a new tariff policy for SBEE. The operation is in line with the
activities of MCA-Benin, especially those that aim to: (i) recruit a consultant to define the profiles and
missions of SBEE’s managers and Board of Directors; (ii) recruit a consultant to propose a new
electricity tariff structure; (iii) invest close to USD 136 million to boost electricity production capacity
in Benin, including solar plants for a total capacity of 45 MW, and off-grid projects targeting zones not
covered by SBEE network. The Bank’s budget support will also consolidate the EU’s efforts to
strengthen ARE, which benefited from EUR 500,000 financing that enabled it to rent premises and
procure office equipment. The EU is also preparing a EUR 103 million budget support for the 2016-
2020 period to help consolidate the rule of law and governance in Benin.
4.4. Linkages with Other Bank Operations
4.4.1. The Bank’s active portfolio in Benin comprises 11 public sector projects, including 3
international projects, for a total commitment of UA 261.4 million, comprising UA 165.9 million
(63%) for national projects and UA 95.5 million (37%) for multinational projects. Projects at risk
8
account for 9% of the portfolio. The portfolio disbursement rate is 30% and the average project age is
3.5 years. The sector breakdown of the portfolio portrays the predominance of transport infrastructure
(about 55%) followed by agriculture (34%), energy (7%), water and sanitation (3%) and the financial
sector (2%). The project’s overall performance is very satisfactory, with a score of 3 on a scale from 0
to 4.
4.4.2. Complementarity with Other Operations: PASEBE I is in synergy with the Bank’s other
operations in the country, especially the Multinational Project for Interconnection of the Electricity
Networks of Nigeria and CEB through a 330 kV line financed by the Bank in 2002. Indeed, it is this
line that will transmit 60 MW of electric power under the Power Purchase Agreement (PPA) that Benin
intends to conclude with Nigeria, in addition to the already existing PPA with Nigeria and CEB.
4.4.3. Lessons Learned from Previous Operations: The Bank has implemented several budget support
operations in Benin, namely the Budget Policy-Based Programme (PARB) approved in 2001, two
Poverty Reduction Support Programmes (PASRP I and PASRP II) approved in 2003 and 2005, and the
Economic and Financial Reforms Support Programme (PAREF) approved in 2012. The lessons learned
at completion of the projects remain relevant, and are reflected in this programme’s design, particularly
the need for a coherent national strategy in the intervention sector, the importance of involving key
national structures directly or indirectly concerned with the programme objectives throughout the
project cycle, and the need to support the programme through institutional support operations. The
SBEE Grid Reinforcement Project scheduled for 2017 will contribute to strengthening the outputs of
PASEBE I. The Bank also financed nine (9) operations in the electricity sub-sector in Benin. The two
recent projects are: (i) the electrification project for 17 rural centres, which was the subject of a
completion report in September 2006 and a performance review report in May 2011; and (ii) the second
rural electrification project completed in 2011 and whose completion report was prepared in December
the same year. The main lesson learned here is the need to reduce time frames for: (i) the ratification of
loan/grant agreements and procurements; (ii) the disbursement of counterpart contributions; and (iii)
recourse to long-term structures for the implementation of projects.
4.5. Analytical Underpinnings
4.5.1. PASEBE I is based on a number of works, including the Study to assess the economic cost
of the poor quality and development of energy services conducted in 2010 and updated by the current
Government. The 2010 study concluded that poor quality of electric power supply hampers production
and runs down the working materials and other equipment of industrial enterprises, thereby reducing
productivity and affecting public finance as seen in the dwindling tax revenue. The production sectors
suffered losses estimated at close to CFAF 157 billion from 2006 to 2010, determined using declared
rates of decline of activities, proportionate to each sector’s share in GDP. As regards households, about
CFAF 30 billion was invested from 2008 to 2010 in equipment to control poor energy quality.
Irrespective of the results of the update on the 2010 study, the Government feels that the situation has
worsened and short-term solutions should be found, while preparing a long-term strategy. PASEBE I is
also based on the diagnosis of the electricity sector master plan, as well as the joint Government/TFP annual
energy sector review reports.
V. PROPOSED PROGRAMME
5.1. Programme Goal and Objective
5.1.1. The programme’s main goal is to increase electric power supply so as to create appropriate
conditions for more inclusive and sustainable economic growth. Its specific objectives are to: (i) support
regular electric power supply; and (ii) improve sector governance.
9
5.1.2. The rationale for the Bank’s assistance is the need to provide an urgent response to the electric
power shortage that Benin is currently experiencing due to insufficient national supply and the
difficulties encountered by the country’s main electric power suppliers. This insufficient power supply
affects economic activity in the country, and if nothing is done, it can affect the country’s macro-
economic stability and cause social unrest. Thus, by Letter No. 295/MPD/DG/SGM/DGIFD/DPF/SBOI
of 13 May 2016, the Government requested budget support to help it remedy the power crisis situation
marked by long and frequent power cuts. Granting the country financial support will enable it to increase
national production through fuel supplies to IPPs established in the country, and contract for additional
power supply outside the CEB contract. In the long run, these two actions will help to increase overall
supply, reduce selective power cuts, and create appropriate conditions for economic recovery and social
peace. PASEBE I also comes within a context where tax revenue is negatively affected by the slowdown
of economic activity in Nigeria and the Naira devaluation. This has led to lower imports destined for re-
export to Nigeria and dwindling customs duties (7% drop in 2015) which in turn has led to deeper budget
deficit. Thus, if granted, the financial requested support will enable the country to create appropriate
conditions for economic recovery, increase budgetary resources, and have resources to undertake more
actions for the population.
5.2. Programme Components
5.2.1. The programme is designed around two (2) main guidelines aimed at supporting regular supply of
electric power and improving sector governance.
Component I – Support for regular electric power supply
5.2.2. Support for regular electric power supply consists in supporting Government’s efforts to ensure
regular electric power supply to the country by: (i) continuing to supply fuel to generation plants hired
by independent producers for total capacity of 150 MW; (ii) importing 60 MW from Nigeria’s
independent producers in addition to contractual quantities received from CEB. If implemented, these
actions will allow for a quick solution to the problem of electric power deficit, along with other actions
over the next three years to sustainably increase national electric power supply.
5.2.3. Problems and Constraints: Insufficient electric power supply hampers economic growth. The main
challenges in this component include: (i) increasing electric power supply; (ii) improving service quality with
fewer outages; and (iii) developing access to electric power. Through this component, the focus will mostly be to
improve the country’s capacity to supply stable electric power to administrative services, businesses, industrial
enterprises and households connected to the power grid.
5.2.4. Recent measures adopted by the Government: Several measures have been identified by the
Government to address the crisis in the electricity sub-sector. To address the electric power deficit and reduce
outages, Government took immediate measures consisting in increasing available energy supply by an
additional capacity of 230 MW. To that end, an international competitive competition was launched for
the production, before end-2016, of 150 MW under a lease arrangement. The competitive bidding
process culminated in the selection of two (2) independent producers: one to supply 100 MW and the
other 50 MW. Each contract covers a period of 12 months from the date of commercial commissioning
of the equipment scheduled for end-October 2016. The supply of fuel to run the generators thus leased
is the responsibility of the Government of Benin. An analysis of the two contracts is attached as Annex
VII of the Technical Annexes. Immediate actions taken by the Government to address the energy
situation include negotiating with a Nigerian independent producer to supply a total minimal quantity
of 60 MW, at a per-kWh cost ranging between CFAF 70 and 80. These negotiations are patterned on
the PPA model prepared by the ECOWAS Electricity Sector Regulatory Authority (ARREC). To
conclude these contracts, Benin received special authorization from the CEB High Inter-State Council
allowing it to directly import electric power for a 12-month period without passing through CEB, which
only has to ensure transit on its existing 330kV transmission network between Benin and Nigeria.
10
5.2.5. Programme Activities and Expected Outcomes: The Bank will support the Benin Government to
supply fuel required for operating leased generators of total production capacity of 150 MW. The Bank’s support
will also help the Government to offer guarantees to the Nigerian independent producer with whom negotiations
are underway to import 60 MW. The IPP demands that advance payment equivalent to three (3) months of bills
be made to it. The aim of these two measures is to respond rapidly to the electricity sub-sector crisis marked by
recurrent selective power cuts. The Government’s commitment to provide adequate funds for the supply of fuel
for 12 months will be one of the measures that Government must fulfil before PASEBE I is presented to the ADF
Board of Directors for approval. The supply of the equivalent of three (3) months electric power to the Nigerian
supplier is considered as an indicative measure. Implementing the measures of this component of the programme
will help to achieve the following results: (i) at least 210 MW increase in electric power supply at end-2016; (ii)
improvement of SBEE’s service quality by a significant drop in power cuts in terms of frequency and duration.
Component II: Improvement of Sector Governance
5.2.6. Improvement of governance in the electricity sub-sector is contingent on reforms to: (i)
strengthen the organizational structure of SBEE; (ii) improve the financial situation of SBEE by clearing
arrears owed by the State; and (iii) strengthen ARE’s missions and operating resources.
5.2.7. Problems and Constraints: The main constraints stem from weaknesses in two of the main
stakeholders of the electricity sub-sector in Benin, namely SBEE and the Electricity Regulatory
Authority (ARE). These weaknesses hamper the former’s economic viability and prevent the latter from
exercising its regulatory power. SBEE’s high level of indebtedness is a major constraint that weakens
all electricity sector stakeholders. Debt is largely caused by State services which do not pay their
electricity bills, making it impossible for SBEE to in turn honour its obligations to its suppliers,
particularly CEB which supplies close to 92% of electric power to SBEE. The recovery rate of SBEE’s
debts is 30% for Government departments and public institutions, and 65% for clients who are not
Government departments. The State has not paid any bills to SBEE since it made a 5 billion payment in
2013. At end-2015, the amount of invoices issued to Government departments was about CFAF 14
billion. SBEE also suffers from its very close proximity to State authorities, which robs its managers of
the necessary autonomy to efficiently manage the company. Indeed, the State holds 100% of SBEE’s
capital, and appoints its managers as well as the members of its Board of Directors. For its part, ARE
was established in 2003 to ensure electricity service quality and set rates to guarantee the sub-sector’s
financial equilibrium. Indeed, ARE is not in a position to accomplish its missions because Decree No.
2009-182 of 13 May 2009 establishing it does not give it effective power to set rates. Furthermore, ARE
does not have stable and sufficient resources for its operation and financial autonomy. The CFAF 120
million budget granted it for FY 2016 turned out to be insufficient. It relies for its operation on a
European Union subsidy of EUR 500,000 which, in particular, provides resources for the rental of its
premises.
5.2.8. Recent Measures Adopted by the Government: These measures include the improvement of
SBEE management. The Government changed the company’s management team by appointing an
interim team pending the recruitment of a General Manager and Deputy Manager through competition.
The Government also reviewed the missions and profiles of the Board members of the company. In this
regard, MCA-Benin will recruit a consultant to prepare the terms of reference of the new management
team and define the composition and profile of members of the Board of Directors. In its search for
ways of reducing electric power consumption by Government services, the Government is currently
installing pre-paid meters in the various Ministries.
5.2.9. Activities of the Programme and Expected Outcomes: The programme seeks to encourage the
Government and SBEE to reconcile their mutual and other debts, and agree on a debt settlement plan.
The operation will support the Government by enabling it to honour part of its debt to SBEE. The
programme also aims to encourage the Government to provide ARE with sufficient financial resources
and empower it to set electricity rates by: (i) revising Decree No. 2009-182 of 13 May 2009 establishing
11
the ARE; (ii) instituting, by joint decree of the Ministry of Energy and the Ministry of the Economy and
Finance, a fee to finance the operation of ARE.
5.3. Policy Dialogue
5.3.1. This operation is crucial for consolidating dialogue with the authorities on factors
hampering energy sector performance. With all the ongoing and planned operations in its intervention
programme, the Bank will be one of the main partners in the sector in the coming years. Thus, this
programme is strategic since it will help to strengthen dialogue to improve the overall energy sector
governance framework, as well as facilitate implementation and guarantee the impacts of the Bank’s
ongoing and future interventions.
5.4. Loan Conditions
5.4.1. Three preliminary measures have been identified under PASEBE I and are presented in the
table below. The measures were the subject of dialogue with Benin authorities during an appraisal
mission in September 2016. The indicative measures will promote dialogue with the Government of
Benin after disbursement of funds. This approach will create a solid platform for dialogue for
implementation of the measures identified, ahead of other interventions planned by the Bank in the
energy sector and budget support in Benin. The measures are outlined in the table below.
Table 1 Preliminary Measures in 2016 and Indicative Measures
MEASURES PRECEDENT TO
PRESENTATION TO THE BANK’S
BOARD OF DIRECTORS – 2016
EVIDENCE OF
IMPLEMENTATION INDICATIVE MEASURES
Component 1 : Support for Regular of Electric Power Supply
Measure 1: Provide resources required for
the purchase of fuel to operate the newly
contracted production units for the supply of
150 MW (done)
Evidence 1: Evidence of
provision in whole or in part of
resources required for the
purchase of fuel (included in the
2017 budget)
Indicative Measure 1: Provision of
resources required for advance payment
corresponding to 3 months of electricity
bills to be purchased from a Nigerian
supplier
Measure 2 : Obtain authorization from the
High Inter-State Council to allow Benin to
import electric power without passing
through CEB (done)
Evidence 2 : Transmission of
authorization of the High Inter-
State Authority
Indicative Measure 2: Signing of
electric power supply agreements with a
Nigerian independent producer for a
minimum additional capacity of 60 MW
Component 2 : Support for Improvement of Sector Governance
Sub-component 2.1. Strengthening of the Electricity Regulatory Authority
Indicative Measure 3 : Revision of
Decree No. 2009–182 of 13 May 2009 in
2017 to empower ARE to approve rates
Indicative Measure 4 : Joint Order of
the Ministry of Energy and the Ministry
of the Economy and Finance to institute a
fee to finance ARE operation
Sub component 2.2. Improvement of SBEE Management
Measure 3: Reconcile the mutual debts of the
State and SBEE (done)
Evidence 3: Transmission of the
mutual debt statement as at 30
November 2016
Indicative Measure 5: Transmission of
the action plan for the appointment of the
GM, DGM and composition of the BD of
SBEE after the work of the consultant
recruited by MCA-Benin
Indicative Measure 6: Update of the
mutual debt reconciliation statement
between SBEE and the Government.
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5.5. Good Practice Principles for the Application of Conditionality
5.5.1. Pursuant to Bank Policy on Budget Support Operations, the five good practice principles for the
application of conditionality were observed in the design of PASEBE I. In its design, this budget support
operation took into account the five (5) good practice principles for the application of conditionality: (i)
stronger national ownership by emphasizing dialogue with the Government during the implementation of its
energy sector recovery strategy; (ii) the macro-economic and public finance management thematic group serves
as a framework for coordination of partners who provide budget support; (iii) the programme is fully consistent
with the Government’s development priorities in the energy sector; (iv) disbursement conditions will be fewer
and flow from the energy sector matrix; and lastly (v) the Bank’s support is aligned with the country’s budgetary
cycle.
5.6. Financing Requirements and Mechanisms
5.6.1. This budget support operation is an integral part of external financing sources that will
contribute to offset the budget deficit. During the programme implementation (2017), the budget
deficit, excluding budget support, stands at CFAF 1002.9 billion. To bridge this gap, there is external
financing (including budget support) amounting to CFAF 210.3 billion, and domestic financing
amounting to CFAF 792.6 billion. The Bank Group’s budget support operation represents 43% of the
financing requirements for 2017.
Table 2
Financing Requirements and Sources in CFAF Billion
Financing Requirements for 2016 and 2017 (in CFAF Billion)
2016 (RFL) 2017 (Est.)
A Total Revenue and Grants 948.5 1 007.7
Including grants 0 15.8
B Total Net Expenditure and Loans 1,423.5 2,010.6
Recurrent expenditure 1,026.6 1,569.4
Including interest payments on debt 82.0 103.7
Equipment expenditure 396.9 441.1
C Overall Balance (commitment base) (A - B) -475.0 -1,018.7
D Accumulated Arrears 0.000 0.000
E Overall Balance (commitments base including grants)
(C + D) -475.0 -1,002.9
F External Financing (excluding budget support) 60.45 172.7
G Domestic financing 391.3 792.6
H Financing (F+G) 451.8 965.3
I Financing Requirements (-H-E) 23.2 -37.6
J Bank Contribution 0 16.35
K Other Contributions 23.2 21.25
Financing Gap 0.0 0.0
L Residual Financing Gap 0.000 0.000
5.7. Application of Bank Group Policy on Accumulation of Non-Concessional Debts
5.7.1. Financed with Benin’s ADF allocations, PASEBE I is consistent with Bank Policy on Non-
Concessional Loans. The country’s debt sustainability analysis indicates a low debt risk level. Discussions are
underway with the IMF for the conclusion of a programme before end-2016. Furthermore, Benin is eligible for
non-concessional borrowings on a case-by-case basis for investment projects with high economic yield, within
upper limits that will be determined in the programme with the IMF.
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VI. PROGRAMME IMPLEMENTATION
6.1. Programme Beneficiaries
6.1.1. Development of the energy sector on a stable basis will benefit the country’s economy as a whole.
The programme’s direct beneficiaries are SBEE and the Electricity Sector Regulatory Authority. The indirect
beneficiaries are private sector operators, especially very small, small and medium-sized enterprises, mostly those
developed by women and youths through more availability of electric power needed to properly operate their
activities. The programme will also help to improve the quality of services offered by social infrastructure, such
as access to medical services, water and education. Thus, the final beneficiaries of the programme are the
population, who will enjoy better living conditions as a result of inclusive growth supported by a reliable energy
sector. Apart from these direct beneficiaries, the entire population of Benin will benefit indirectly from the
programme’s significant socio-economic spinoffs, especially as a result of better public service delivery (health,
education, drinking water, etc.), private sector development, job creation, and reduced urban insecurity.
6.2. Impact on Gender, the Poor and Vulnerable Groups
6.2.1. The programme will help to improve the living conditions of households, and consequently
women. Indeed, selective power cuts mostly affects households and women. The programme will directly benefit
31% of Benin’s population, who currently have access to electricity. Most of them are women (52%) who are
very active in the informal sector (petty trading, catering, handicraft, food processing) and have little means to
buy back-up generators or fuel in sufficient quantities to operate during selective power cuts. Access to electricity
will help to lighten women’s household chores and enable them to gain time that could be used for income-
generating activities. Improving electric power supply will also have a positive impact in terms of maternal and
neonatal health, as well as women’s physical security (lighting in towns and villages will curb attacks on women).
By supporting economic activity, the programme will help to boost economic growth, improve people’s
living conditions, and preserve social peace. Indeed, prolonged interruption of electric power supply
will have a devastating impact on economic activity, given the links between electricity, water supply,
activities in the public/private sectors and those of households connected to networks (water and
electricity) in large urban centres. Thus, PASEBE I will help to foster economic growth, which slowed
down in 2015 due partly to power outages, as well as to more vigorously implement policies and
programmes that will improve people’s living conditions and reduce poverty.
6.3. Environmental Impact and Climate Change
6.3.1. This programme is a budget support operation, which supports reforms that do not have a direct
incidence on the environment and climate change (Category III). As such, it will not negatively affect the
environment, directly or indirectly, and is unlikely to induce negative social impacts. With respect to the
Integrated Safeguard System (ISS) requirements, the programme does not require an environmental and social
assessment. Improving the management of the electricity sector will generally have positive impacts on the
efficient use of resources.
6.4. Impact in Other Areas
6.4.1. The programme will contribute to improving the quality of public and social services. Indeed, by
helping to improve electricity supply efficiency, the programme will respond more appropriately to the
population’s expectations as regards public and social services (hospitals, schools and universities, etc.).
14
6.5. Implementation, Monitoring and Evaluation
6.5.1. The programme implementation will be coordinated by the Ministry of Energy, Water and
Mines working closely with the Ministry of the Economy and Finance. In this regard, the Ministry of
Energy will ensure that the entities concerned (SBEE, ARE, and DGE) fully play their roles, each in its own
sphere, in implementing the reforms. All the above stakeholders were consulted during the PASEBE I preparation
and appraisal missions so as to ensure better ownership of the programme by the Government. The Ministry of
Energy, Water and Mines will submit periodic programme progress reports to the Bank. In addition, the Bank
will closely monitor programme implementation.
6.6. Financial Management and Disbursement
6.6.1. Country Fiduciary Risk Assessment: The financial management system did not perform
satisfactorily due to a number of weaknesses: (i) the very frequent use of exceptional budget expenditure
execution procedures; (ii) shortcomings in cash-flow planning; (iii) absence of an effective mechanism
for limiting expenditure commitments to appropriations; (iv) failure to use the estimated cash-flow plan
for budget management; (v) the failure to process or partial processing of some budgetary operations in
SIGFIP; (vi) non-exhaustive information in budget implementation reports which are a tool for
monitoring budget management; and (vii) few and poor quality CDC staff. Although the overall
fiduciary risk is significant, it could be gradually made moderate through implementation of the
PAAGFP which is expected to be updated based on the 2014 PEFA review.
6.6.2. Financial Management and Disbursement Mechanisms: The programme’s proposed financing is
a UA 19.92 million loan from Benin’s ADF-13 country allocation. This amount will be disbursed in a
single tranche after approval of the programme by the ADF Board of Directors, subject to fulfilment of
the conditions agreed between the Bank and Government as outlined in paragraph 8.2.3. The funds will
be paid into a special Public Treasury account opened with the National BCEAO Agency in Cotonou.
6.6.3. Due to delays in the conduct of external audits by the Audit Bench of the Supreme Court, the
programme will be audited by a private audit firm, financed by the State budget. The audit report on the
programme’s financial flows will be submitted to the Bank no later than six months after the close of
this fiscal year. The terms of reference of the financial audit will be submitted to the Bank for prior
approval.
6.6.4. Procurement: Since programme resources are disbursed as budget support, procurements will
be made in line with national procedures. Benin made significant normative progress during the reform
of public procurement procedures between 2009 and 2013. Law No. 2009-02 instituting the Public
Procurement Code was enacted on 7 August 2009 and, in accordance with WAEMU Directives No.
04/2005 and 05/2005 on public procurement, several implementing decrees were signed.
Responsibilities are clearly defined for institutions tasked with public procurement. However, despite
this progress, much still remains to be done in terms of establishing the legislative, regulatory and
institutional framework of the national procurement system. Due to poor computerization of
procurement operations and interfacing between the Integrated Public Finance Management System
(SIGFIP) and the Integrated Management System (SIGMAP), reform is needed to modernize the public
expenditure management framework. Significant reforms are also required to improve the role of the
National Directorate of Public Procurement Control (DNCMP) and the Public Procurement Regulatory
Authority (ARMP) as fiduciary authorities. That notwithstanding, the review of the national
procurement system conducted by the Bank in 2010 ahead of the use of national competitive bidding
concluded that the system largely complies with international standards and Bank Policy because of the
transposition of the aforementioned WAEMU Directives No. 4 and 5 of 2005.
15
VII. LEGAL DOCUMENTATION AND AUTHORITY
7.1. Legal Documentation
7.1.1. The legal document to be used for the programme is the Loan Agreement between the
Government of Benin (the Borrower) and the African Development Fund (the Fund).
7.2. Conditions for Bank Intervention
7.2.1. Conditions precedent to Presentation of the Programme to the Board: Based on dialogue
with the Government of Benin, it was agreed that the Borrower shall implement the measures precedent
to presentation of the programme to the Bank’s Board of Directors. These conditions are indicated in
Table 1.
7.2.2. Conditions precedent to Effectiveness of the Loan Agreement: Effectiveness of the Loan
Agreement shall be subject to fulfilment of the conditions outlined in Section 12.01 of the General
Conditions Applicable to Loan Agreements, Guarantees and Grant Agreements of the Bank.
7.2.3. Conditions precedent to Disbursement: In addition to effectiveness of the Loan Agreement,
the disbursement of loan resources shall be subject to fulfilment, by the Borrower, of the following
condition: Provide the Fund with evidence of the opening of a treasury account by the Borrower with
the National BCEAO Agency to receive the loan resources.
7.3. Compliance with Bank Group Policies
7.3.1. The main Bank Group guidelines applied in this programme are the Guidelines concerning
loans to support the development budgets of the Bank’s Regional Member Countries as defined in the
Document ADF/BD/WP/2003/182/Rev.2 of 28 April 2004. No waiver is requested in this proposal in
respect of these Guidelines.
VIII. RISK MANAGEMENT
8.1. Two main types of risks are likely to affect achievement of the programme outcomes: (i)
macro-economic instability: The country’s high economic vulnerability to external shocks (drop in
world market prices of cotton, low rainfall, vulnerability to the economic situation in Nigeria, etc.) could
affect the stability of its macro-economic framework; (ii) fiduciary risk: The fiduciary risks are due to
the persistent weaknesses in public finance management, especially in budget credibility and control
mentioned in the 2014 PEFA report.
8.2. However, these risks are mitigated by the new Government’s commitment to manage
public finance more stringently and comply with public procurement procedures. With regard to the
risk linked to macro-economic instability, the Authorities have taken cognizance of these risks and defined
policies aimed at diversifying the economy by further harnessing sectors with high growth potential,
particularly agriculture, fisheries, livestock, agro-industry and tourism. To mitigate the fiduciary risk,
the new Government is resolutely committed to addressing these issues and is implementing measures
to improve procurement efficiency and fight against corruption. Furthermore, several infrastructure
contracts concluded by the Government under conditions deemed non-compliant with the law have been
cancelled. This new Government’s clear commitment will help to mitigate this risk for the programme
actions and measures which will be monitored during PASEBE I supervision missions.
16
IX. RECOMMENDATION
9.1. The energy sector budget support programme (Phase 1) in Benin seeks to help the country
preserve its socio-economic fundamentals achieved over several years of economic reforms. In light of
the foregoing, it is recommended that the Board of Directors approves an ADF loan not exceeding UA
19.92 million to the Government of Benin for implementation of the programme subject to the
conditions defined in this report.
I
Annex I: Benin – Energy Sector Budget Support Programme in Benin – Phase I (PASEBE I): Matrix of Measures
Measures already taken by the
Government to develop the Energy Sector
Programme Measures (PASEBE I) Implementa
tion
Schedule
Outcomes Responsible Entities
A. Support for Regular Electric Power Supply
Signing of generator lease contracts with
independent producers for a capacity of 150
MW
Support the Government to supply fuel to the
independent power producers July 2016
Increase in electric power supply
and reduction of selective power
cuts
Ministry of Energy,
Water and Mines
Authorization by the High Inter-State
Authority to enable Benin import electric
power without passing through CEB
Support the Government to enable Benin
import electric power August 2016
Increase in electric power supply
and reduction of selective power
cuts
Ministry of Energy,
Water and Mines
Negotiations for the signing of electric power
supply contracts with a Nigerian independent
producer for a minimum additional capacity
of 60 MW
Support the Government to enable it to pay
an advance to the Nigerian supplier
equivalent to 3 months’ bills as demanded
January
2017
Increase in electric power supply
and reduction of selective power
cuts
Ministry of Energy,
Water and Mines
B. Improve Sector Governance
Installation of pre-paid metres in Government
departments
Clearance of Government’s debt to SBEE March
2017
Improvement of the electricity
sub-sector
Ministry of the
Economy and Finance
Ministry of Energy,
Water and Mines
II
Annex II: Note on Relations with the IMF
From June 2010 to June 2014, Benin implemented an ECF-backed Economic and Financial Programme
for an amount of SDR 74.28 million. The programme’s implementation was deemed satisfactory by the
IMF after the sixth and last programme review in May 2014.
In December 2015, the IMF Executive Board concluded Article IV consultations with Benin. At the
request of the Government of Benin, a team from the International Monetary Fund (IMF), led by
Christine Dieterich, Mission Chief for Benin, visited Cotonou from June 6 to 18, to start discussions
with the Authorities on a possible three-year economic programme supported by the Extended Credit
Facility (ECF) arrangement.1
Ms. Dieterich issued the following statement at the end of the mission:
“The Government found a difficult macroeconomic and treasury situation upon assuming office in April
2016. In particular, while fiscal policy was generally sound in earlier years, the fiscal deficit increased
to around 8.5 percent of GDP in 2015, with continued spending overruns in the first quarter of 2016.
This widening of the fiscal deficit was financed by large bond issuances in the regional financial market,
adding significantly to future debt service. Worse, during the last quarter of 2015 and first of 2016,
contracts were signed for off-budget projects close to 24 percent of GDP. These loans are expensive and
have short maturities. Due to incorrect classification of these arrangements as Private Public
Partnerships (PPP), standard procurement procedures were circumvented, raising severe concerns about
their governance and quality.
“Despite this expansionary fiscal policy, 2015 growth is estimated to have decelerated to around 5
percent, as the slowdown in Nigeria - Benin’s main trading partner - kicked in. For 2016, with Nigerian
growth decreasing further, Benin’s growth is expected to be in the range of 4.5 to 5 percent. Furthermore,
poverty has worsened since 2011 compared to the household survey of 2015. Inflation has remained
moderate despite a recent rise on account of higher food and fuel prices.
“The Government is determined to reverse the deterioration in the fiscal deficit and debt. The 2016
budget supplement is a decisive step towards bringing the fiscal situation back under control. While
welcoming this impressive budgetary correction, the team cautioned that careful cash management and
commitment control will be required for the rest of the year in order to successfully implement it.
“The Government was able to suspend the majority (20 percent of GDP) of the in-transparent off-budget
projects, as their implementation had not yet started. An evaluation of these projects and their financing
is under way, as this level of additional short-term debt would severely derail fiscal sustainability, and
put at risk macroeconomic stability over the next years.
“Looking ahead, the Government is in the process of preparing a detailed medium-term investment plan.
In view of the debt-service burden and vulnerabilities in the economy, in particular, a narrow and volatile
export base, the challenge will be to find the right balance between preserving debt sustainability and
addressing investment needs aimed at removing growth bottlenecks.
“Being well aware of this challenge, the Government initiated reforms to improve governance and the
regulatory framework, in particular for energy, so as to facilitate private sector investment. This will not
only reduce the investment burden on the budget, but also facilitate the private-sector led growth
necessary to create employment for Benin’s young and growing population. These efforts include
reforms to improve the Government’s spending efficiency, in particular, by addressing severe
weaknesses in audit, and to mobilize additional revenues. In addition, developing the appropriate
regulatory framework for PPP will be necessary to safeguard against future risks for the budget. The
Government has also started to welcome attempts to improve the governance of State-owned enterprises,
in support of an ambitious privatization agenda.
III
“The team met with the President of the Republic, Minister of State, Secretary General in the Presidency,
Minister of State charged with Planning and Development, Minister of the Economy and Finance,
National Director of the BCEAO, and other Government and Central Bank officials, as well as
representatives from the financial sector and international development partners.
“The team wishes to thank the authorities, as well as all other interlocutors, for their hospitality, the
excellent collaboration, and the high-quality discussions. A second mission is planned for late summer,
with the objective of completing negotiations on an ECF programme supported by the IMF.”
IV
Annex III: Agreement with Benin on an Extended Credit Facility Arrangement
Press release N°17/
February 22, 2017
IMF Reaches Staff-level Agreement with Benin on an Extended Credit Facility Arrangement
End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings
after a visit to a country. The views expressed in this statement are those of the IMF staff and do not
necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this
mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's
Executive Board for discussion and decision.
Benin’s authorities and an IMF staff team reached staff-level agreement on a three-year economic
program that could be supported by an ECF for about USD 150.4 million.
The request is subject to approval by the IMF Executive Board, which is expected to consider it in
March/April 2017.
The authorities’ program would help Benin achieve a strong and inclusive growth in order to reduce
poverty while ensuring public finance and debt sustainability.
At the request of the government of Benin, a team from the International Monetary Fund (IMF), led by
Norbert Toé, Mission Chief for Benin, visited Cotonou from February 15 to 22, 2017, to finalize
discussions with the authorities on a three-year economic program that could be supported by the IMF
under its Extended Credit Facility (ECF) arrangement.
At the conclusion of the mission, Mr. Toé issued the following statement:
“The IMF team reached staff-level agreement with the authorities, subject to approval by IMF
Management and the Executive Board, on a three-year program that could be supported by an
arrangement under the ECF in an amount of SDR 111.42 million (about USD 150.4 million) or 90
percent of Benin’s quota in the IMF.
“The three-year economic program reflects the strategic orientations of the Government’s Action Plan,
2016-21, and aims to improve the living conditions for the population, maintain a stable macroeconomic
environment, and preserve public debt sustainability. The main objectives of the program are to (i) create
fiscal space through the modernization of the tax and customs administration and enhancing the
efficiency of government spending; (ii) refocus policies on sustainable and inclusive growth through
targeted social spending and investment in infrastructure; and (iii) strengthen the business environment.
The program includes a set of comprehensive structural reforms aimed at improving revenue
administration, strengthening public financial management and debt management, and supporting
private sector development. Regarding domestic revenue mobilization, the government aims to increase
domestic revenues from 14.7 percent of GDP in 2016 to 17.4 percent of GDP by the end of the program,
essentially through a broadening of the lax base.
International Monetary Fund
Washington DC 20431, USA
V
“The ECF-supported program would help Benin achieve a strong and inclusive growth in order to reduce
poverty while ensuring public finance and debt sustainability. The IMF resources will help the country
address its balance of payment need and also catalyze significant support from development partners
that would preserve debt sustainability.
“The authorities and IMF staff agreed on the importance of preserving debt sustainability in light of the
important public investment program. In this context, a debt sustainability analysis will be carried out
on a regular basis and the government has committed to improve public investment management and
promote partnership with the private sector as well as technical and financial partners in order to improve
infrastructure investment.
“A report on the staff-level agreement is expected to be submitted to the IMF Executive Board for
consideration in March/April 2017.
“The mission met with President Talon, and held discussions with Romuald Wadagni, Minister of
Economy and Finance; Abdoulaye Bio Tchané, Senior Minister of State of Planning and Development;
Pascal Irénée Koupaki, Senior Minister of State, General Secretary at the Presidency, Alain Komaclo,
National Director of the regional central bank (BCEAO), and other senior government officials, as well
as with representatives of Benin’s international development partners and the banking and business
communities.
“The mission is grateful to the authorities for the constructive spirit in which discussions were held and
for their warm hospitality.”
1 The ECF is a concessional lending instrument for low-income countries with a three-year Government economic programme agreed with the IMF.
VI
Annex IV: Selected Macro-Economic Indicators
Indicators Unit 2000 2011 2012 2013 2014 2015 (e) 2016 (p)
National Accounts
GNI at Current Prices Million US $ 2 502 7 041 7 537 8 155 8 585 ... ...
GNI per Capita US$ 360 720 750 790 810 ... ...
GDP at Current Prices Million US $ 2 360 7 814 8 117 9 111 9 575 9 042 9 766
GDP at 2000 Constant prices Million US $ 2 360 3 578 3 770 3 983 4 244 4 463 4 707
Real GDP Growth Rate % 4,9 3,3 5,4 5,6 6,5 5,2 5,5
Real per Capita GDP Growth Rate % 1,7 0,4 2,6 2,9 3,8 2,4 2,8
Gross Domestic Investment % GDP 18,7 24,1 22,7 28,5 25,0 26,5 28,8
Public Investment % GDP 6,4 6,3 5,7 6,1 5,4 6,0 6,3
Private Investment % GDP 12,2 17,8 17,0 22,4 19,6 20,6 22,5
Gross National Savings % GDP 14,8 10,9 9,7 11,1 10,9 16,2 16,9
Prices and Money
Inflation (CPI) % 4,2 2,7 6,7 1,0 -1,1 0,4 2,3
Exchange Rate (Annual Average) local currency/US$ 712,0 471,9 510,5 494,0 494,4 591,4 603,1
Monetary Growth (M2) % 68,1 9,0 10,8 14,9 17,3 16,2 ...
Money and Quasi Money as % of GDP % 38,1 56,6 55,8 59,0 65,8 67,7 ...
Government Finance
Total Revenue and Grants % GDP 17,5 20,1 20,7 21,3 19,1 17,7 18,0
Total Expenditure and Net Lending % GDP 19,2 21,9 21,2 23,2 21,2 22,0 21,6
Overall Deficit (-) / Surplus (+) % GDP -1,7 -1,7 -0,4 -1,7 -1,9 -4,3 -3,6
External Sector
Exports Volume Growth (Goods) % 43,2 -6,4 19,5 101,3 18,2 4,0 17,7
Imports Volume Growth (Goods) % -6,9 6,2 10,5 39,9 -3,0 2,4 18,3
Terms of Trade Growth % -28,1 -57,9 -37,9 -20,7 -8,9 -7,9 -9,0
Current Account Balance Million US $ -104 -516 -587 -673 -690 -639 -695
Current Account Balance % GDP -4,4 -6,6 -7,2 -7,4 -7,2 -7,1 -7,1
External Reserves months of imports 8,6 5,2 4,1 3,0 3,3 3,4 ...
Debt and Financial Flows
Debt Service % exports 16,3 4,4 6,2 5,6 6,2 7,4 5,9
External Debt % GDP 55,9 16,9 16,9 19,0 20,4 19,5 19,0
Net Total Financial Flows Million US $ 232 703 589 698 564 ... ...
Net Official Development Assistance Million US $ 243 673 509 660 600 ... ...
Net Foreign Direct Investment Million US $ 60 161 230 360 377 ... ...
Source : AfDB Statistics Department; IMF: World Economic Outlook, October 2015 and International Financial Statistics, October 2015;
AfDB Statistics Department: Development Data Portal Database, March 2016. United Nations: OECD, Reporting System Division.
Notes: … Data Not Available ( e ) Estimations ( p ) Projections Last Update: April 2016
BeninSelected Macroeconomic Indicators
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
%
Real GDP Growth Rate, 2004-2016
-2
0
2
4
6
8
10
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Inflation (CPI),
2004-2016
-10,0
-9,0
-8,0
-7,0
-6,0
-5,0
-4,0
-3,0
-2,0
-1,0
0,0
2 004
2 005
2 006
2 007
2 008
2 009
2 010
2 011
2 012
2 013
2 014
2 015
2 016
Current Account Balance as % of GDP,
2004-2016
VII
Annex V: Table of Bank Operations in Benin under CSP 2012-2016
Table 2 : Implementation of the CSP Operational Programme and Resources Mobilised between 2012 and 2016 (in UAM)
Financed Operations
Amount
Initially
Envisaged
Window/YearAmount
ApprovedADF
Private
Sector
Window
FSN OthersApproval
YearRemarks
Operations planned and approved or
being considered
Budget Support to Economic and
Financial Reforms (2012-2013)30,00 FAD/2012 30,00 30,00 2012
Oueme Valley Agricultural Infrastructure
Support Project30,00 ADF/2013 44,77 40,03 4,74 2013 GEF Grant
Parakou Urban Crossing Project 35,00ADF/2014-
201536,50 35,30 1,20 2014 and 2015 GEF Grant
FINADEV Line of Credit for SME
Financing0,80
Private
Sector/20140,80 0,80 2014
Project of Benin's Adherence to the
African Trade Insurance Agency (ATI-
ACA)
4,97 ADF/2015 4,97 4,97 2015
Phase 2 of the Community Forest
Management Support Project
(PAGEFCOM II)
5,00 ADF/2015 7,00 5,00 2,00
Planned for
the second
half of 2016
GEF Grant
Financing of the Abidjan –Lagos
Motorway Corridor Study :UA 1 million1,00 ADF/2015 1,00 1,00 2016
Phase II of the Togo/Benin
Multinational Lome-Cotonou Road
Rehabilitation and Abidjan-Lagos
Corridor Transport Facilitation Project
3,30 ADF/2015 1,00 1,00
Planned for
the second
half of 2016
Other Planned but Unimplemented
Operations
Dual 50MW Thermal Power Plant
Construction Project at the Maria Gléta
Site
20,00Private Sector
Window/20120,00 Not done
Benin-Togo Multinational 147MW
Adjarala Hydropower Plant Project35,00 ADF/2014 0,00 Not done
Financed by
another donor
SBEE Distribution Networks
Rehabilitation Project10,00 ADF/2016 0,00
Postponed to
2017
Unplanned but Approved Operations or
Those Being Studied
Support for the Decentralisation of
Water and Sanitation Services (Protos
NGO)
0,79 0,79 2013 AWF Grant
Improvement of the Management of the
Grand Nokoue Oil Sludge0,84 0,84 2013 AWF Grant
Project of Emergency Assistance to the
Population of Malanville et Karimama0,53 0,53 2014 FSS Grant
E-Administration and National Optic
Fibre Backbone Needs Study0,04 0,04 2014
KOAFEC
Grant
Project to Reduce SONEB Water Losses
and Improve DWS Systems Viability6,00 6,00 2015
Livestock Production and Resilience
Support Project17,07 17,07 2015 GAFSP Grant
Project to Support Transparency in
Micro-Finance Institutions in Benin0,30 0,30 2015 FRCM Grant
Energy Sector Budget Support 18,71 18,71
Prévu en
décembre
2016
Total 175,07 170,31 136,01 0,80 6,00 27,50
Origin of Mobilized Resources