Benin hopes grant will strike blow against poverty

Benin is hoping that a five-year, multimillion-dollar grant from the United States under the auspices of the Millennium Challenge Account (MCA) will finance development projects to reduce poverty, notably through resolving land ownership and credit problems.

“It’s a sort of Marshall Plan that America is offering Benin, to enable [the country] to emerge from poverty,” said Henri Gouthon, a member of the technical development committee of the Beninese programme of the MCA, and president of the National Council of Exporters of Benin.

According to the government, these funds will allow it to meet enormous economic challenges that it does not have funds to address.

The biggest slice of the grant, about $169-million, will be spent on an initiative titled “Access to Markets”, which is to focus on the port of Cotonou—also Benin’s economic hub.

The money will go towards dredging the harbour so that it can accommodate the largest boats in the world, and buying a more modern tugboat.
There are also plans for putting in place internationally accepted security measures such as video surveillance of the docks. The goal is to capture the majority of sub-regional maritime traffic, and to open Benin to foreign markets.

A second initiative, “Access to Land”, will be allocated $36-million to help Beninese property owners obtain land titles through banks almost free of charge. Simultaneously, this could help resolve the thorny problem of land insecurity.

“I also like the fact that this programme allows each Beninese who has a property to be able to use it to obtain credit from the banks, as our banks have too many liquid assets. Those who need money don’t have dependable collateral to offer them,” said Luc Gnacadja, a former environment minister and architect of the MCA programme in Benin.

The “Access to Financial Services” initiative, allotted $19,6-million, is expected to bolster micro-finance institutions, so that they can make loans to clients at very low interest rates—while the government hopes the loans may even be interest free. This will allow even the smallest investors to start income-generating activities, or their own micro-enterprises.

The fourth and final initiative is called “Access to Justice”. Launched last month in Cotonou , it is being funded with $34-million that will be used to build eight county courts, a court of appeals and a centre for legal information. The programme will also be used to establish a legal aid fund, to provide low-cost legal services for the nation’s poorest citizens.

Project planning

In planning these projects, Gouthon said, Beninese experts asked themselves what the main obstacles to development were in the West African country.

In addition, “We had to justify the benefit of each point of the programme, or the Americans would never have given us the funds,” he observed, noting that before the US government would approve the programme, Benin had to show it could raise the income of about 80% of the population.

“This programme was started to allow nearly a million Beninese households to get out of poverty,” said Simon Pierre Adovèlandé, the national coordinator of the programme—which has involved the private sector, government, unions and civil society.

According to the 2006 Human Development Report, issued by the United Nations Development Programme, just less than 31% of people in Benin live below the poverty line, on less than $1 a day.

Mariam Aladji Boni-Diallo, Benin’s Minister of Foreign Affairs, says she’s “convinced that even before the end of the five years the life of the poorest Beninese people will change, since government will work so that through the programme the poorest ... can have access to financing at a very reduced rate, if not a zero rate”.

The promised ease of access to credit has given great hope to Souriath Badarou, who owns a shop in Cotonou that sells basic necessities. Before opening her shop, she borrowed about $5 000 at a rate of 18% from a local micro-finance institution, in 2001.

“This loan is going to kill me, because the payments are too close together and the interest rate too high ... If this MCA can help us, we’ll finally be able to breathe,” she said.

The project will succeed if its funds are used wisely, noted Reckia Madougou, the president of the Front of Civil Society Organisations for the MCA. ‘‘Civil society will be in the monitoring system to ensure that what has been planned is really what is done.”

Trade boost

According to Gouthon, experts are hoping that the programme will boost the trade in agricultural products that have the potential to spark growth, as agriculture is Benin’s most important sector. These products include cashews and shea nuts, which are cultivated throughout the north and some central regions—and pineapples, which are grown in the south. The country also has potential in the fisheries sector: shrimp are found in the entire lagoon area in southern Benin.

Once bottlenecks have been removed by the implementation of the programme, specifically as concerns a resolution of land-security issues and the modernisation of Cotonou’s port, production of all other crops—manioc, yams, palm oil and even cotton—will also be improved, and they will be easily exported, he said.

According to Gouthon, each of these basic products will be processed in local industries, where value will be added to them. In this way, small farmers, like other entrepreneurs, can all gain.

At stake, he added, is the possibility of making “Benin progress from the situation of being a country of transit and traffic of all types—in order to turn it into a country of production and transformation so that we will also have something to consume and sell to others.”

The MCA dates back to 2002 when US President George Bush called for development to be transformed by greater accountability on the part of wealthy and poor countries—with rich nations providing increased aid, and poorer states acting more responsibly.

The increased funding put forward by the US in a bid to lead by example was placed in the newly created MCA, administered by an American agency set up specifically for this purpose: the Millennium Challenge Corporation.

Bush has said the MCA will “reward nations that root out corruption, respect human rights and adhere to the rule of law ... invest in better healthcare, better schools and broader immunisation ... [and] have more open markets and sustainable budget policies”.—IPS

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