Policies toward Foreign Direct Investment

The Government of Benin actively encourages foreign investment.  The creation of APIEX in 2015 resulted in a dialogue between the Government and investors to implement reforms and improve Benin’s business environment.  The APIEX mission is to reduce and, where possible, eliminate administrative barriers to doing business and to attracting additional foreign direct investment.  The agency has significantly reduced processing times for registration of new companies (from 15 days to one day) and construction permits (from 90 to 30 days). In July 2016, Benin passed a law establishing a commercial tribunal of first instance and a commercial appellate court, a move that is expected to expedite the settlement of business-related disputes.  The full-service office that expedites customs clearances, reduces the cost of clearances, and minimizes processing barriers to clearing cargo at the Port of Cotonou makes it possible to obtain cargo clearance within 48 hours of the date of its off-loading at the Port of Cotonou, though in practice this tends to take somewhat longer. The reinstitution of the cargo inspection and scanning program known as PVI (le programme de vérification des importations), first tried in 2012 resumed operations at the Port of Cotonou in 2017.  Under the PVI program, private company Benin Control scans 10 percent of all imports, with containers selected randomly for scanning. Benin Control bills all containers exiting the Port of Cotonou – regardless of whether they are selected for scanning – at the rate of 35,000 FCFA (USD 68) for a 20-foot container, and 45,000 FCFA (USD 78) for a 40-foot container.

Limits on Foreign Control and Right to Private Ownership and Establishment

Beninese law guarantees the right to own and transfer private property.  The court system enforces contracts, but the judicial process is often inefficient and plagued by corruption.  Enforcement of rulings is problematic. Most firms entering the market work with an established local partner and retain a competent Beninese attorney.  A list of English-speaking lawyers and legal counselors is available on the Embassy’s website https://bj.usembassy.gov/u-s-citizen-services/attorneys/.

Other Investment Policy Reviews

In 2015, the Beninese government conducted an investment policy review (IPR) jointly through the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO), and the United Nations Conference on Trade and Development (UNCTAD).  Further to a 2016 fact-finding mission, the UNCTAD Report on the Implementation of the IPR of Benin assesses progress in implementing the original recommendations of the IPR, and highlights a few more policy issues to be addressed in the investment climate. The full report may be found at http://investmentpolicyhub.unctad.org/Upload/BeninIR2016.pdf .

Business Facilitation

In an effort to attract Foreign Direct Investment (FDI) and tourism revenue, Benin has instituted a visa-free system for African nationals.  Those traveling on non-African passports can obtain e-visas through an online process for short stays at https://evisa.gouv.bj/en  /.  The country is also planning to open four new trade offices abroad to enhance Benin’s international business opportunities.  One is already underway in Shenzhen, China; others will be located in Europe, the United States, and the Middle East.

Benin made property registration simpler and less expensive in order to boost the real estate market and improve access to credit.  The measures apply to real personal property, estate and mortgage taxes, and property purchase receipts, with the aim of reducing corruption in the property registration process.  In order to register property, individuals and businesses must present a taxpayer identification number (registration for which is now free). Land registration and property purchase certifications are free, but there is a fee for obtaining a property title.  In a related measure, the government issued 2,513 titles free of charge in 2016 for owners of land that had been registered with the financial and technical assistance of the Millennium Challenge Corporation’s first compact with Benin.

It should take roughly 24 hours to register a business, and there is no need for a notary’s assistance.  APIEX serves as the single investment promotion center and conduit of information between the foreign investor and the Beninese government.

Benin defines:

• Micro-enterprises as having less than five employees;
• Small and medium size enterprises (SMEs) as having between five and 99 employees.  SMEs may be a subsidiary of an international firm.

A full-service office – run by a private company under the supervision of the Ministry of Infrastructure and Transport – is charged with expediting customs clearances and minimizes processing barriers to clearing cargo at the Port of Cotonou.  This office makes it possible to obtain cargo clearance within as little as 48 hours after its off-loading at the Port of Cotonou, though in practice this tends to take somewhat longer.

Outward Investment

The Beninese government has no policies or incentives in place to encourage the country’s businessmen to invest abroad.  The Beninese government does not restrict domestic investors from investing abroad.

Transparency of the Regulatory System

Benin is a member of UNCTAD’s international network of transparent investment procedures.  Foreign and domestic investors can find detailed information on administrative procedures applicable to investment and income generating operations at http://benin.eregulations.org/  , including the number of steps, name and contact details of the entities and persons in charge of procedures, required documents and conditions, costs, processing time, and legal bases justifying the procedures.  There is no rule to prevent a monopoly over a particular business sector. The Benin Private Investment Council (CIPB) is the only business-related think-tank or body that advocates for investors, http://www.cipb.bj/  .  Generally, draft bills are not available for public comment.  However, individuals (including non-citizens) have the option to file appeals about or challenge passed or enacted bills with the country’s Constitutional Court.

International Regulatory Considerations

Benin is a member of the Organization for the Harmonization of African Business Law, known by its French acronym OHADA, and has adopted OHADA’s Universal Commercial Code (codified law) to manage commercial disputes and bankruptcies within French-speaking African member countries.  Benin is also a member of OHADA’s Common Court of Justice and Arbitration and the International Center for the Settlement of Investment Disputes (ICSID). OHADA provisions govern bankruptcy. Debtors may file for reorganization only, and the creditor may file for liquidation only.

Legal System and Judicial Independence

The preamble of the Beninese Constitution, adopted on December 11, 1990, highlights the attachment of the Beninese people “to principles of democracy and human rights as they have been defined by the Charter of the United Nations of 1945 and the Universal Declaration of Human Rights of 1948, the African Charter on Human and Peoples’ Rights adopted in 1981 by the Organization of African Unity and ratified by Benin on 20 January 1986 and whose provisions form an integral part of this present Constitution and of Beninese law and have a value superior to the internal law.”

Benin’s domestic law includes various legislative and regulatory texts covering family law, land law, labor law, criminal law, criminal procedure, and civil, commercial, social, and administrative proceedings.  The commercial court, created in 2017, enforces commercial related issues. Benin created an anti-terrorism, drugs, and economic crimes court (CRIET) in 2018. The CRIET has made several controversial decisions, including in cases of corruption charges against individuals who are among President Talon’s detractors.  In general, court cases tend to proceed slowly and there may be challenges in the enforcement of court decisions. Magistrates and judges, though appointed by the Executive, are by law independent. Benin’s courts enforce rulings of foreign courts and international arbitration.

Laws and Regulations on Foreign Direct Investment

The APIEX one-stop-shop website, http://benin.eregulations.org/  , provides information on regulations and procedures for investment in Benin.  Benin is a member of OHADA’s Common Court of Justice and Arbitration (CCJA) and the International Center for the Settlement of Investment Disputes (ICSID).  Investors may include arbitration provisions in their contracts in order to avoid prolonged entanglements in the Beninese courts. The United Nations’ investment guide for Benin (https://www.theiguides.org/public-docs/guides/benin/  ) details investment procedures in Benin.

Competition and Anti-Trust Laws

There is no existing agency that reviews transactions for competition-related concerns.  Only the local court or international arbitration courts may address these concerns filed with them.  There are no recent or existing competition cases to highlight.

Expropriation and Compensation

Based on a 1992 privatization law, the Government is forbidden from nationalizing private enterprises operating in Benin.

In conformity with World Bank structural reform commitments, the government opened the cotton sector and its related components (namely ginning and inputs) to the private sector in the 1990s, and in 2008 divested the ginning industry part of its agricultural parastatal SONAPRA (Société Nationale pour la Promotion Agricole) moving the ginning assets and regulatory control functions to SODECO (Societe de Developpement du Coton).  SODECO is a public-private joint venture: 35 percent government, 45 percent private (controlled by Societe Commune de Participation-SCP of now-President Patrice Talon), and the remainder split between stock market, local communities, cotton growers, and staff members but run by SCP. According to the founding convention, the GOB was to cede by 2013 its share to SCP.  With no publicly available on current SODECO ownership nobody would argue that SCP fully controls it.  In October 2012, prompted by concerns over performance and mismanagement, the government reassumed control of cotton production and ginning holdings under SONAPRA.  In 2014, OHADA’s CCJA judged that the Beninese government had illegally seized SODECO’s ginning assets, and similarly had illegally revoked the Port of Cotonou cargo inspection contract with the private company Benin Control.  The CCJA ordered payment of USD 267 million in compensation to the two companies owned or largely controlled by then-cotton tycoon, and current Head of State, Patrice Talon (see http://www.ohada.org/index.php/fr/ohada-au-quotidien/role-des-audiences-publiques-de-la-cour-ccja  ).  Under President Talon’s administration, in 2016 SODECO took back control of its ginning facilities and SONAPRA was dissolved.

In 2006, the government took over the management of previously privatized oil company SONACOP on the grounds that the company was in financial disarray, lacked funds for its operations, and was unable to supply gas stations throughout the country.  SONACOP is still a state-owned enterprise charged with import and distribution of petroleum products.

In February 2017, the Council of Ministers announced that the government was terminating concessions for the management of four state-owned hotels (two in Cotonou and two in northern Benin), and instructed the Minister of Justice to file reparations claims against the concessionaires on the grounds that they had not fulfilled their concession agreements.

In 2012, the government took control of the private bank Banque Internationale du Benin (BIBE) stating that poor management risked leading the bank to bankruptcy and possible systemic risk to the banking sector.  BIBE is still in government hands.

Dispute Settlement

ICSID Convention and New York Convention

Benin is a member of the International Center for the Settlement of Investment Disputes (ICSID) and New York Convention.

Investor-State Dispute Settlement

Post has no reports of government interference in judicial handling of investment disputes.

All three known past investment disputes between U.S. investors and the Beninese government were resolved in favor of the U.S. investors.  However, in 2016, the government revoked the contract of U.S.-based company SECURIPORT for the provision of civil aviation and immigration security services in the favor of Morpho-Dys, a company based in Cote d’Ivoire; this dispute remains unresolved.  The local courts recognize and enforce foreign arbitral awards issued against the government. In 2010, Benin’s civil society challenged a contract awarded by the government in the communications sector and the award decision was reversed.

There is an investment incentive agreement between the Government of the United States of America and the Government of Benin.

International Commercial Arbitration and Foreign Courts

Benin is a member of the Organization for the Harmonization of African Business Law, known by its French acronym OHADA, and has adopted OHADA’s Universal Commercial Code (codified law) to manage commercial disputes and bankruptcies.  Benin is also a member of OHADA’s Common Court of Justice and Arbitration and the International Center for the Settlement of Investment Disputes (ICSID) and as such enforces foreign arbitral awards as well as foreign court rulings. Post is unaware of any investment dispute resolution made in favor of a state-owned enterprise by domestic courts.

Bankruptcy Regulations

OHADA provisions govern bankruptcy.  Debtors may file for reorganization only, and creditors may file for liquidation only.

Benin ranked 110 in the “Resolving Insolvency” category of the World Bank Group’s 2019 Doing Business report.  While this may seem a downgrade from 2018’s score of 105, it actually reflects a very modest improvement even as its relative score to other countries places it lower on the list.

Real Property

Benin’s Land Act, enacted on August 24, 2013, and amended in 2017, codifies real property rights.  Land ownership disputes account for 80 percent of the cases seen by Beninese tribunals. The Land Act is designed to ensure fair access to land and protect ownership rights.  It stipulates that unoccupied acquired land cannot be reverted to other or previous owners (though there still exists the risk of squatters). The Land Act establishes a transparent legal procedure for obtaining and documenting ownership, reduces property speculation in urban and rural areas, and encourages land development.  In an effort to identify property owners and register land titles, the government declared that the land registration process would be free of charge until further notice.

The Land Act stipulates that development projects financed by international or multinational agencies cannot involve or lead to forced evictions.  The state is obligated to do everything possible at each stage of development project implementation to ensure due respect of economic, social and cultural rights recognized by international conventions and covenants and guarantees by the Beninese constitution.

Secured interests in real and personal property are recognized and enforced.  Benin’s legal system protects and facilitates acquisition and disposition of property, land, buildings, and mortgages.  Secured interests in property are registered with the Land Office of the Ministry of Finance. However, it is recommended that foreign and non-resident investors buy land with title deeds and the intervention of a notary public in order to help avoid any land disputes that may result from the acquisition process.  Large land leases for investment in rural areas are enforced by local city halls in conformity with the Land Act. Additional information regarding the acquisition of property may be found at the Beninese Land Agency’s website at http://www.beninfoncier.bj/?page_id=173  .

Intellectual Property Rights

Benin is a signatory to both World Intellectual Property Organization Internet treaties.  As a member of the World Trade Organization, Benin is party to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).  However, enforcement of intellectual property rights is constrained by Benin’s limited capacity.

In July 2016, Benin’s Director of Pharmacies announced the seizure of 2.4 tons of counterfeit solid and injectable medication from a private residence in Cotonou and the arrest of a suspect.  In February 2017, the government seized another 80 tons of counterfeit drugs in Cotonou and the court found 12 individuals guilty of illegally acting as pharmacists.

Benin is not included in the U.S. Trade Representative’s 2019 Special 301 Report or Notorious Markets List.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en  .

There are several wholly owned SOEs operating in the country, including mainly public utilities (electricity and water), fixed and mobile telecommunications, postal services, port and airport management, gas distribution, pension funds, agricultural production, and hotel and convention center management.  There are also a number of partially owned SOEs in Benin. Some of these receive subsidies and assistance from the government. There are no available statistics regarding the number of individuals employed by SOEs.

With the exception of public utilities (including electricity and water), pension funds, and landline telephone service for which the public telephone company retains a monopoly, many private enterprises compete with public enterprises on equal terms.

SOE senior management may report directly to a government ministry, a parent agency, or a board of directors comprised of senior government officials along with representatives of civil society and other parastatal constituencies.  SOEs are required by law to publish annual reports and hold regular meetings of their boards of directors. Financial statements of SOEs are reviewed by certified accountants, private auditors, and the government’s Bureau of Analysis and Investigation (BAI).  Though the government audit institution has the authority to conduct a review of SOE financial statements, it has yet to do so.

SOEs are established pursuant to presidential decrees, which define their mission and responsibilities.  The government appoints senior management and members of the Board of Directors. SOEs are generally run like private entities and are subject to the same tax policies as the private sector.  The courts independently process disputes between SOEs and private companies or organizations without government interference.

Benin is not a member of OECD.

Privatization Program

The government has elected to support targeted divestiture programs rather than total privatization of State-Owned Enterprises.  The state-owned telecommunications company, Benin Telecom Infrastructure, is targeted for either a divestiture program or dissolution by 2021.  The state-owned electricity utility, Société Béninoise d’Energie Electrique (SBEE) will soon be managed privately through a management contract, even though the government will retain full ownership.  Through the second MCC compact on power there will be increased opportunities for Independent Power Producers (IPP) to participate in solar power generation.

Foreign investors may participate in privatization programs.  In March 2015, the governments of Benin and Niger jointly signed a document that would dissolve the Benin-Niger Railway Organization (OCBN) parastatal and assign its concession to foreign private investors.

In December 2017, the government authorized the Minister of Infrastructure and Transport to sign a three-year renewable management contract for the Port of Cotonou with the Belgian firm Port of Antwerp International (PAI).  PAI accordingly took over management of the port in May 2018.  The move is intended in part to attract foreign investors to fund updates to and expansion of the port.

The government procurement process is specified by the Beninese procurement code (Code des Marchés Publiques:  http://www.finances.bj/spip.php?article804  ).  Tenders from the central government are announced in major publications, newspapers, and posted on the website of the Ministry of Finance and Economy at www.finances.bj  .  However, in practice the government frequently uses sole sourcing for PAG implementation, and in these cases does not publish procurement requests before selecting a vendor.  Published tenders often include local investor participation requirements.

Beninese procurement law allows for open and closed bid processes.  Contracts are often awarded based on government solicitations to short-listed companies with industry-specific expertise, often identified based on companies’ commercial activities conducted in other overseas markets.  The public procurement process is not always deemed non-discriminatory. Foreign companies have expressed concerns about unfair treatment, biased consideration, and improper practices specific to the process of selecting short-listed companies.

In general, government policies and public tenders are made public online and in the newspapers.  Anti-corruption, human rights, environmental protection, and consumer NGOs and activists are active in Benin and report misconduct and violations of good governance practices.  There are also government-funded agencies in charge of monitoring business conduct. They include the Post and Communication Regulation Agency (ARCEP), the Anti-Money Laundering Agency, the National Commission on Systems and Freedom, and the National Anti-Corruption Authority (ANLC).

Benin does not currently have a significant extractives/ mining industry, though small-scale or artisanal mining activities do take place in some parts of the country.

Benin has laws aimed at combatting corruption.  The government has demonstrated the political will to reduce corruption and has imposed administrative sanctions and removals from office against high profile, allegedly corrupt officials.  In early- and mid-2018, the government requested, and the National Assembly approved, the lifting of parliamentary immunity of a small number of opposition parliamentarians accused of corruption or embezzlement during former government roles.  No current or former high-level government official has yet faced prosecution in Beninese courts, leaving the effectiveness of anti-corruption efforts unproven. Corruption remains a recurring problem in areas including public administration, government procurement, customs and taxation, and the judiciary.

Bribery is illegal and subject to up to ten years’ imprisonment, but enforcement of this is subject to the same capacity constraints that hamper many rule of law issues in Benin.  Private companies establish their own code of conduct to avoid conflicts of interest in line with the country’s laws. The government has identified the fight against corruption as a national priority.  Efforts reflecting government focus on fighting corruption include the 2013 creation of the National Anti-Corruption Authority (ANLC) in charge of referring corruption cases to court. By law, the ANLC has the ability to combat money laundering, electoral fraud, economic fraud, and corruption in the public and private sectors.  Benin’s State Audit Office is also responsible for identifying and acting against corruption in the public sector. A new court, the CRIET, was set up in 2018 and was conceived in part to help the administration fight corruption.

Benin is a signatory of UN Anticorruption Convention and the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions.

Resources to Report Corruption

Contact at government agency or agencies responsible for combating corruption:

Jean-Baptiste Elias
President
ANLC
01 BP 7060 Cotonou, Benin
+229 21 308 686
anlc.benin@yahoo.fr

Ms. Blanche Sonon
President
Social Watch
02 BP 937, Cotonou, Benin
+229 21042012 – 229 95961644
swbenin@socialwatch-benin.org