VZCZCXRO6201
RR RUEHMA RUEHPA
DE RUEHCO #0779/01 3500815
ZNR UUUUU ZZH
R 150815Z DEC 08
FM AMEMBASSY COTONOU
TO RUEHC/SECSTATE WASHDC 0689
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUCPCIM/CIMS NTDB WASHDC
RUEHZK/ECOWAS COLLECTIVE
RUEHFR/AMEMBASSY PARIS 1369
RUEHDK/AMEMBASSY DAKAR 1439

UNCLAS SECTION 01 OF 04 COTONOU 000779 
 
SIPDIS 
 
STATE FOR AF/W ACOOK AND EB/IFD/OIA 
LONDON FOR PLORD 
PARIS FOR BKANEDA 
STATE PLEASE PASS USTR 
 
E.0.12958: N/A 
TAGS: EINV EFIN ETRD ELAB KTDB PGOV USTR OPIC BN
SUBJECT: BENIN'S 2009 INVESTMENT CLIMATE STATEMENT 
 
REF: STATE 123907 
 
¶1. Please find below Embassy Cotonou's submission for Benin's 2009 
Investment Climate Statement keyed to the topics in reftel. 
 
------------------------------ 
Openness to Foreign Investment 
------------------------------ 
 
¶2. President Yayi, in office since April 2006, aims to establish 
double digit economic growth in Benin before the end of his term in 
2011 and is cognizant that he needs foreign investment to reach that 
goal.  In an attempt to attract increased investment, President Yayi 
set up the Presidential Investment Council (PIC) in 2006. The 
objectives of this organization are to reinforce dialogue between 
the government and investors and speed the process of identification 
and implementation of reforms in order to improve the business 
environment. The PIC includes local and foreign private investors 
and government representatives. 
 
¶3. The Government of Benin (GOB) officially favors and encourages 
foreign investment. Many opportunities for foreign investment have 
historically been linked to the privatization of state-owned 
enterprises, whose numbers have been reduced from 130 in 1980 to 
only four currently: SBEE (electricity), SONEB (Water), Benin 
Telecoms S.A (Telecommunications) and La Poste du Benin S.A (Post). 
Privatization of these final parastatals is slow-moving.  However, 
the GOB achieved the privatization of cotton parastatal SONAPRA in 
2008 after two unsuccessful attempts.  Foreign companies are invited 
to bid on privatizations, and the bidding process is open and 
well-publicized. 
 
¶4. The country's 1990 current investment code, revised and adopted 
in July 2008 authorizes the industrial sector to invest over USD 20 
million (10 billion Francs CFA) in the country.  The code 
establishes the conditions to obtain benefits under different 
investment regimes and grants extensive discretionary power to the 
Investment Control Commission at the Ministry of Commerce (MC). The 
MC has a "guichet unique" or one-stop shop to help dispense with 
unnecessary and time-consuming formalities facing investors. The GOB 
also set up the Business Registration Center in the Cotonou 
headquarters of the Benin Chamber of Commerce and Industry (CCIB) to 
facilitate the registration of new businesses. Using the center it 
is possible to register a new company within 2 weeks depending on 
the type of company. 
 
¶5. Beninese law guarantees the right to own and transfer private 
property.  The Beninese court system upholds the sanctity of 
contracts, but justice is often slow. Beninese courts process, on 
average, 8 percent of their civil cases each year. 
 
¶6. To ease the company start-up process, investors are strongly 
encouraged to hire a local notary for the required assistance. Any 
American firm establishing an office in Benin should work with an 
established local partner of solid reputation and retain a competent 
Beninese attorney. A list of English-speaking lawyers and notaries 
is available from the Embassy's commercial section. 
 
 
-------------------------------- 
Conversion and Transfer Policies 
-------------------------------- 
 
¶7. Benin is a member of the West African Economic and Monetary Union 
(WAEMU). Benin's currency is the CFA franc, which is issued by the 
Central Bank of West African states (BCEAO). The CFA franc is pegged 
to the euro, and one US dollar presently equals about CFA 500 
(November 2008). 
 
¶8. Foreign exchange is readily available. Transfers exceeding 
300,000 FCFA, approximately $600, to a Western country other than 
France require approval from the BCEAO and the Ministry of Economy 
and Finance (MEF).  There are no restrictions on the remittance of 
profit by companies which invest in Benin.  The remittance of 
profits by individual resident investors is restricted in certain 
areas. 
 
------------------------------ 
Expropriation and Compensation 
------------------------------ 
 
¶9. The state guarantees under law that it will make no attempt to 
 
COTONOU 00000779  002 OF 004 
 
 
nationalize enterprises operating in Benin.  The government does 
have the capacity to seize property by eminent domain. If the 
government does seize land, it is required to pay compensation to 
the owners. 
 
------------------ 
Dispute Settlement 
------------------ 
 
¶10.  There have been few investment disputes, and there does not 
seem to be a discernible pattern in the causation of the disputes. 
 
¶11. 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 to govern commercial 
disputes and bankruptcies.  Benin is also a member of OHADA's Common 
Court of Justice and Arbitration and of the International Center for 
the Settlement of Investment Disputes (ICSID). 
 
¶12. Benin does not maintain a commercial court system. Its civil 
courts handle commercial cases.  In principle, Benin's courts will 
enforce foreign court judgments.  A profound backlog of civil cases 
often results in a wait of two or more years before matters proceed 
to trial. Corruption, however, remains an impediment to the 
administration of justice.  Businesses and other litigants routinely 
complain that corruption is particularly widespread at the trial 
court level, as well as at administrative hearings. 
 
--------------------------------------- 
Performance Requirements and Incentives 
--------------------------------------- 
 
¶13. Benin's government maintains a welcoming posture to foreign 
investors, and its 2008 Investment Code contains several incentives, 
in the form of tax reductions, for investors depending on the level 
and type of investment.  Depending on the amount of the investment, 
investors do not have to pay taxes on profits, exports of finished 
products, or imports of industrial equipment.  To obtain these 
benefits investors must meet several criteria including employing a 
minimum number of Beninese nationals, safeguarding the environment, 
and meeting nationally accepted accounting standards.  The 
Investment Control Commission monitors companies that benefit from 
these provisions to ensure their compliance with the standards 
required for receiving incentives. 
 
----------------------------------------- 
Right to Private Ownership and Investment 
----------------------------------------- 
 
¶14. The right to private ownership and investment exists in both 
theory and practice. Beninese law guarantees freedom of trade; 
choice of customers and suppliers; the right to move freely 
throughout the country; the right of foreign employees and their 
family members to leave the country; and freedom from government 
interference in the management of private enterprises. 
 
----------------------------- 
Protection of Property Rights 
----------------------------- 
 
¶15. Secured interests in real and personal property are recognized 
and enforced. Benin's legal system protects and facilitates 
acquisition and disposition of all property, including land, 
buildings and mortgages.  As mentioned above, Benin's judicial 
system moves slowly and it may take a great deal of time to enforce 
a secured interest.  Secured interests in property are registered 
with the Land Office in the Ministry of Finance. 
 
¶16. International intellectual property agreements are not 
adequately enforced.  Illegally reproduced DVDs containing pirated 
television shows and movies are sold openly. Fake and smuggled drugs 
are also available in the country's markets. 
 
------------------------------------- 
Transparency of the Regulatory System 
------------------------------------- 
 
¶17. While the government has adopted a transparent policy to foster 
free enterprise, red tape is often a problem, Benin slipped in the 
World Bank's 2007-2008 Doing Business ranking from 123 to 169 in the 
world and ranked 36 among the Sub-Saharan African countries behind 
Burkina Faso, Senegal, Cote d'Ivoire, Togo, and Mali, fellow members 
 
COTONOU 00000779  003 OF 004 
 
 
of the WAEMU. According to the same study, it takes a typical 
entrepreneur 332 days to secure the necessary licenses, approvals, 
and water and electricity connections to build a warehouse.  The law 
governing commercial transactions conforms to the standards set by 
OHADA.  Many labor laws remain holdovers from Benin's pre-1990 
Marxist era and serve as impediments to private enterprise. 
 
--------------------------------------------- ----- 
Efficient Capital Markets and Portfolio Investment 
--------------------------------------------- ----- 
 
¶18. Government policy supports free financial markets in Benin, 
subject to regulatory oversight by the Ministry of Finance and 
Economy, and the Central Bank of West African States (BCEAO). Credit 
is allocated on market terms and foreign investors can get credit on 
the local market. Some observers claim the banking industry is not 
subject to effective mandatory regulation and some banks are not 
managed in a transparent fashion. 
 
------------------ 
Political Violence 
------------------ 
 
¶19. Benin is a democracy that has not known political violence in 
recent memory. 
 
---------- 
Corruption 
---------- 
 
¶20. President Yayi's government has demonstrated a high level of 
political will to combat corruption in Benin and has moved, in 
several high-profile cases, against corrupt government officials. 
Corruption remains a problem in the customs service, with government 
procurement, and in the judicial system.  Investors may encounter 
numerous attempts to solicit bribes as they begin operations in 
Benin. 
 
¶21. While Benin lacks specific anti-corruption legislation, both the 
offer and receipt of a bribe are illegal in Benin and punishable by 
a penalty of up to ten years imprisonment.  Benin is a signatory to 
the UN Convention against corruption.  The newly established State 
Audit Office is responsible for preventing corruption in the public 
sector. 
 
------------------------------- 
Bilateral Investment Agreements 
------------------------------- 
 
¶22. Benin has bilateral investment agreements with France, Germany, 
and Great Britain. Benin does have a bilateral investment agreement 
with the United States. 
 
-------------------------------------------- 
OPIC and Other Investment Insurance Programs 
-------------------------------------------- 
 
¶23. The Overseas Private Investment Corporation (OPIC) offers 
financing programs to assist companies wishing to invest in 
developing countries, including Benin. OPIC insurance could be 
available to companies wishing to invest in Benin depending on the 
nature and extent of the investment. Potential investors should 
contact OPIC directly for further information at info@opic.gov. 
 
----- 
Labor 
----- 
 
¶24. The government adheres to international labor standards and 
fully recognizes the right to form unions and engage in collective 
bargaining.  The government adopted a new labor code in 1998 aimed 
at increasing flexibility in hiring decisions, eliminating the need 
for prior authorization from the labor directorate for employee 
dismissal, and consolidating labor regulations currently dispersed 
among various texts.  As a practical matter, however, Benin's labor 
practices contain many inefficient features reminiscent of the 
Marxist era.  Foreign companies who dismiss employees for 
unsatisfactory performance are routinely sued. Child labor is 
widespread and, although it is making efforts, the GOB still needs 
to do more to suppress it. 
 
¶25. The Constitution provides workers with the freedom to organize, 
 
COTONOU 00000779  004 OF 004 
 
 
join unions, meet, and strike, and the government usually respects 
these rights in practice.  The labor force is engaged primarily in 
subsistence agriculture and other primary sector activities. 
Although approximately 75 percent of salaried employees belong to 
labor unions, the vast majority of union members are in the public 
sector with a much smaller percentage of workers in the private 
sector unionized.  There are several union confederations, and 
unions generally are independent of government and political 
parties. 
 
¶26. Strikes are permitted; however, the authorities can declare 
strikes illegal for stated causes (for example, threatening to 
disrupt social peace and order), and can require strikers to 
maintain minimum services. 
 
------------------------------ 
Foreign Trade Zones/Free Ports 
------------------------------ 
 
¶27. There is a free trade zone in the Port of Cotonou for imports 
destined for Benin's landlocked neighbors of Burkina Faso and Niger. 
 Foreign importers have complained, however, that corruption in the 
Port of Cotonou makes it difficult to benefit from this. 
 
¶28. The government plans on constructing an additional free trade 
industrial zone in Seme, located on Benin's coast east of Cotonou. 
Initially, the site will be 200 hectares in size, and then doubled 
during its second phase. 
 
------------------------------------ 
Foreign Direct Investment Statistics 
------------------------------------ 
 
¶29. According to the United Nations Conference on Trade and 
Development (UNCTAD), Benin received 63 million dollars in foreign 
direct investment in 2006 (the latest statistics available). 
 
¶30. Much of the foreign investment that has entered Benin since 1990 
has been through the acquisition of interests in privatized 
companies. The principal foreign investors in Benin are from 
Lebanon, India, Germany, France and other Western countries. 
Chinese companies have also begun making investments in Benin. 
Foreign investors have purchased textile, cigarette, cement, and 
brewing companies in Benin. 
 
¶31. Kerr-McGee, has a substantial investment presence in Benin.  The 
Houston-based oil company has acquired rights to a deep-water block 
off Benin's coast and drilled two exploratory wells in March 2003. 
 
BROWN