EU steps up its support for Benin with EUR 184 million

The package consists of direct support to the national budget and support for the decentralisation process.

Through their signature, the authorities of the European Union and Benin have given the green light for the implementation of two flagship governance programmes in Benin. The aim is to support the government's efforts to reduce poverty and promote reforms.

Mr Mimica made the following statement: ‘The EUR 184 million aid package shows the EU's commitment to supporting the Beninese Government in its efforts to introduce good governance, improve the management of public finances and fight fraud and corruption. The efforts already undertaken in these areas must be commended and continued. They are key to winning the trust of the Beninese people, of private investors and of donors.'

The first financing agreement consists of a Good Governance and Development Contract (GGDC) for EUR 114 million, EUR 103 million of which is for direct budget support over a period of five years from 2016. The aim is to promote good economic and financial governance by strengthening the transparent management of public finances, creating a credible system to fight corruption based on the independence of the judiciary, and improving the business climate by implementing reforms that will boost competitiveness and provide greater legal certainty for investments.

Payments under this contract will be established on the basis of a policy dialogue with the government on the progress of reforms in these areas. Technical support for a total of EUR 11 million euros will be provided to help the country achieve the objectives of the Good Governance and Development Contract.

EUR 70 million will go to a programme to support local development (Programme d'Appui au Développement Territorial, PADT), which will help implement Benin's decentralisation and devolution policy. Sectoral budgetary support of EUR 60 million will mostly be channelled through the support fund for local (communal) authorities. The amount of the annual instalments will depend on the results achieved by the Beninese Government, as estimated using a set of 10 indicators to evaluate progress in reforming local government, in terms of both the transfers of government resources to the communes and the management of these resources by the communal authorities.

There will also be EUR 10 million in additional support under this programme for capacity-building at all administrative levels in order to support the National Association of Benin's Communes and for financing innovative regional development projects proposed and implemented by the Beninese communes.

Background

Over the past two years Benin has gone through a full electoral cycle, with local, communal and parliamentary elections in 2015 and presidential elections in 2016. One of the main challenges facing the new government is corrupt practices and the impunity accorded to such practices. By concluding a Good Governance and Development Contract the EU intends to support the government in stamping out these practices and consolidating public finances. This support follows on from a similar contract under the 10th European Development Fund (EDF).

Benin has been engaged in a process of decentralisation designed to bring decision-making closer to citizens since 2003; this process is based on 77 communes. The European Union has supported decentralisation in Benin since reforms began in 2003 with three programmes for a total financing of some EUR 68.8 million. The most recent programme of support for local development under the 10th EDF (2012-2016) combined sectoral budgetary support (EUR 41.2 million) and institutional support (EUR 3.8 million). In so doing the EU has supported the implementation of the national decentralisation policy, enhanced the communes' capacity and resources (including financial), while encouraging the government to make budgetary commitments to the local authorities.

Benin receives EUR 372 million under the 11th EDF for the period 2014-2020. The three priority sectors for this support are: good governance with EUR 184 million, the sustainable development of agriculture with EUR 80 million and access to modern, sustainable energy for EUR 80 million. Civil society support will receive EUR 18 million, while EUR 10 million will go to measures to support the implementation of the national indicative programme.

IP/16/4306