As a developing country, Benin still has so much to do. Benin’s political and economic state needs much development. Politically, Benin is recognized as West Africa’s more stable democracies. Since its transition to democracy in the early 1990s, Benin has been relatively politically stable. However, its economy has been failing. Benin is very aid dependent and very susceptible to international fluxes for its dependence on the cotton market. For this reason, my advices to the country’s leaders are as follows.
Firstly, Benin needs to diversify its political portfolios. Benin is both dependent on the U.S as well as France. Benin is dependent on the U.S for the strong aid gifts due to its commitment to democracy, and France through colonial ties and especially currency. Many government-funded projects are aided by foreign aid money that are so specified, they do not affect the whole population. These aids are conditional to the extent that they hurt other sectors of the economy. Additionally, aids influence the general direction of the government depending on what the donor country favors. Essentially, Benin should diversify its relationship with partnering countries to minimize how much influence the U.S can have on its politics. Likewise, this diversification should decrease its reliance on France. By having a varied portfolio, the awareness of how detrimental it is for another nation to determine exchange rates and other monetary policy will hopefully arise. Benin’s development is party stifled for this reason; it does not control its on money. By diversifying its portfolio, hopefully the need to have a currency that it can control will hopefully become more apparent.
Secondly, I would advice Benin’s political leaders to diversify their economy. Since cotton is Benin’s main export good, any flux in the cotton market can negatively and drastically impact Benin. For this reason, Benin seriously needs to invest in other agricultural goods and industrial goods to decrease its great reliance on cotton. Cotton accounts for roughly 40% of GDP and 80% of all export receipts. Benin is entirely too reliant on this crop and needs to diversify its economic portfolio. However in diversifying its portfolio, Benin’s political leaders should be mindful of the mistake of neighboring Nigeria, and not become susceptible to the Dutch disease. Too much foreign money in the economy can significantly weaken their own currency.
Perhaps the most relevant advice to Benin ties back to its history of dependence on the U.S and France whom are also Benin’s leading import partners. The little profit gained from aid programs are funneled directly back into these economies and leave Benin’s economy paralyzed. I recommend that Benin look to establish import partners with close African nations to develop transcontinental ties and really also to keep their transactions with France and the U.S so restricted and defined. This move could potentially give Benin leverage on matters since these two need Benin’s business transactiosn.