Macroeconomic advice for poverty reduction in the context of the 2030 Agenda

Project description

Title: Macroeconomic advice for poverty reduction
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Republic of Benin
Lead executing agency: Ministry of Economy and Finance, Ministry of Planning and Development
Overall term: 2017 to 2020

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Context

The Republic of Benin is one of the poorest and least developed countries in the world. According to the National Institute of Statistics and Economic Analysis, approximately 40 per cent of the county’s 10.6 million inhabitants live below the poverty line. The United Nations Development Programme (UNDP) estimates that as many as 64 per cent of the population are poor. 

Moreover, public taxation and budgeting in Benin are not sufficiently transparent. The guidelines of the West African Economic and Monetary Union have also not been sufficiently implemented in national financial management. Since 2018, Benin has been a member state of the G20 Compact with Africa initiative, which promotes private investment in Africa. However, the framework conditions for public and private sector investments in the country have been insufficient up to now. The country’s development policy needs to tackle these huge challenges. The main tasks of the Beninese Government involve reducing poverty and implementing the development goals defined in the 2030 Agenda. However, the development process is proving highly complex. The Government needs to coordinate many different actors.

Objective

Benin’s central economic policy actors are in a better position to control poverty reduction processes.

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Approach

The project is strengthening the abilities of the two partner ministries, Finance and Planning, to reduce poverty. These two economic policy actors control the corresponding processes in the country. The project is linked to key positions in economic development planning and policy in Benin. It is therefore able to provide support in central processes, such as the development and implementation of economic policy reforms.

In its four key areas of planning and coherence, public finance, statistics and macroeconomic modelling, the project is working with the relevant departments on a technical level. Initial results include an analysis tool to anchor the development goals in national budget planning. In addition, a monitoring system is monitoring all relevant indicators in the long term. The project is supporting the National Institute of Statistics with methods for collecting the data required to implement the development goals. Moreover, in the context of Benin joining the Compact with Africa, a cost estimation tool has been set up to improve public investment. An overview of investment flows based on topic area and source has been established.

Results

  • Forty per cent of development indicators are fed with data from new collection mechanisms. No data whatsoever was collected previously.
  • The backlog in the preparation of the national accounts has been eliminated for the first time since the year 2000. To achieve this, the project has worked together with 15 auditors and held 10 synthesis workshops.
  • Strategies and processes for selecting priority social spending will promote the redistribution mechanism in future in order to benefit the poor.
  • Nine studies have been conducted to improve knowledge of the economic environment and the quality of key macroeconomic data. The country’s national development strategy for 2018 to 2025 was drawn up based on this.
  • A tool has been established for project cost estimation in order to improve public investment.
  • The issues of equal opportunities and inclusion are now anchored in the budget processes of six ministries. The ‘Gender-Responsive Budgeting’ initiative has contributed to this.
  • According to the Statistical Capacity Indicator, Benin’s statistical capacities improved between 2012 and 2018 from around 58 per cent to 75.6 per cent. This provides a more reliable basis for economic analyses and forecasts.
  • According to the Open Budget Index, budget transparency improved between 2012 and 2015 from one point to 45 points out of a maximum of 100.
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