Macroeconomic Policy Development in Benin

This research paper analyzes the macroeconomic policy responses of the government of Benin and the Central Bank of West African States (BCEAO) to the COVID-19 pandemic. It examines the effectiveness of fiscal and monetary measures, the resulting economic impact on GDP and inflation, and the specific targeting of the agricultural and microfinance sectors to ensure food security and support the informal economy.

• Benin's GDP growth rate declined from 6.5% in 2019 to 4.8% in 2020, with investment falling by 13.4% during the same period. While the industrial and service sectors saw declines, the agriculture sector's growth rate increased from 1.9% in 2019 to 5.3% in 2020.
• The government implemented fiscal measures to support citizens and businesses, including 5.76 billion FCFA ($10 million) for direct cash transfers and subsidies on water and electricity. To support businesses, the government covered 70% of gross employee salaries for three months and paid electricity bills for hotels and travel agencies up to 4.1 billion FCFA ($7.5 million).
• Monetary policy focused on increasing liquidity through the BCEAO, which raised available liquidity at auctions and adopted a full allotment strategy at a fixed rate of 2.5%. The BCEAO also extended the collateral framework to include bank loans to 1,700 prequalified private companies.
• The government established a 30 billion FCFA ($55 million) subsidy fund to support a 100 billion FCFA ($185 million) interest-free financing line for the agricultural sector and MSMEs. This included guaranteeing up to 50% of credit granted to companies, with a maximum limit of 500 million FCFA ($924,000) per MSME.
• Expansionary monetary policy led to a 14% increase in broad money supply from January 2020 to January 2021, which put upward pressure on consumer prices. The author warns that if wages do not keep pace, these rising prices could decrease household wealth and increase poverty.
• The expansion of credit was used to stimulate the economy and prevent bankruptcies, but it created inflationary pressure. However, targeted credit for the agricultural sector helped stabilize food prices, protecting vulnerable households who spend a larger portion of their income on food.

APA

Heffernan, I. (n.d.). Macroeconomic Policy Development in Benin. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2021/12/CoMPRA-10-heffernan.pdf

Chicago

Heffernan, Ian. Macroeconomic Policy Development in Benin. South African Institute of International Affairs, n.d. https://saiia.org.za/wp-content/uploads/2021/12/CoMPRA-10-heffernan.pdf.

Wikipedia

{{cite report |last1=Heffernan |first1=Ian |title=Macroeconomic Policy Development in Benin |publisher=South African Institute of International Affairs |url=https://saiia.org.za/wp-content/uploads/2021/12/CoMPRA-10-heffernan.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{heffernanndmacroeconomic, author = {Heffernan, Ian}, title = {{Macroeconomic Policy Development in Benin}}, institution = {South African Institute of International Affairs}, url = {https://saiia.org.za/wp-content/uploads/2021/12/CoMPRA-10-heffernan.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }