BENIN ECONOMIC NEWS: APRIL 15-JUNE 15, 2009

UNCLAS COTONOU 000257 DEPT FOR AF/EPS: AF/W: ACOOK DEPT PLEASE PASS USTR (LAGAMA) PARIS FOR BKANEDA LONDON FOR PLORD DAKAR FOR FAS RHANSON E.O. 12958: N/A TAGS: EAGR EFIN ECON PGOV BN SUBJECT: BENIN ECONOMIC NEWS: APRIL 15-JUNE 15, 2009 ¶1. This Benin Economic News focuses on the 2008-2009 cotton news, President Yayi's visit to Nigeria, and the sacking of the Minister of Economy and Finance. COTTON NEWS -------------- ¶2. On June 4, 2009 the Cotton Stakeholders Association, AIC, informed Post that the 2008-2009 cotton production amounted to 210,603 metric tons, 13 percent below projections of 242,000. AIC explained that the estimated figure was not reached for a number of reasons. AIC indicated that poor rain fall in some areas and heavy down pour in others resulted in damage to the crop and the resurgence of pests thwarted the projections. ¶3. On June 5, 2009, the GOB announced the prices of cotton gin (raw cotton and seeds) and cotton agricultural inputs for the 2009-2010 cotton campaign. The producers' prices are $0.40 and $0.30 (190 and 140 Francs CFA) per kilogram for the first and the second choice respectively. Fertilizer will be supplied at $0.51 (240 Francs CFA) per kilogram and pesticide at $15.00 (7,030 Francs CFA) per liter to cotton growers. PRESIDENT YAYI'S VISIT TO NIGERIA -------------- ¶4. On June 9, 2009, President Yayi paid a one-day visit to the Nigerian President Umaru Yar'Adua. The two Heads of State discussed issues related to the financial crisis affecting the economy of their respective countries. They convened a joint commission to find solutions likely to help mitigate the impact of the financial crisis on both countries. The economy of Benin heavily depends on trade between the two countries and particularly on the imports of used cars through the Port of Cotonou. The export of used cars to Nigeria slumped over 50 percent. PRESIDENT YAYI SACKS HIS MINISTER OF ECONOMY -------------- ¶5. On June 10, 2009, the Minister of Justice, Victor Tokpanou, announced, on TV, the dismissal of the Minister of Economy and Finance, Soule Mana Lawani and gave the name of his replacement, Idriss Daouda. President Yayi sacked his Minister because he did not properly handle the demands of public health workers who had been on a three-month strike, claiming payment of their pending allowances. Daouda is Banker and Economist by profession, a retired employee of the West African States Central Bank, BCEAO, and a former National Director (1998-2006) of BCEAO representation in Benin. Until his ministerial appointment, Daouda was member of the Benin Post and Telecommunications Regulatory Authority. ¶6. According to the GOB Council of Ministers' report of June 9, 2009, Lawani and the former Minister of Health, Kessila Tchalla were blamed for not consulting the Council of Ministers before announcing a ministerial order dated April 28, 2008 to grant incentive allowances to the public health workers (additional cable by POL is forthcoming). These allowances were the subject of a series of negotiations between these ministers and the trade unions in 2008. The report indicated that the GOB cancelled this order because it is not consistent with a 1986 law governing civil servant status in Benin. However, to encourage the public health workers to resume work at their respective health facilities, the GOB has decided to go ahead with the payment of these allowances starting in June 2009, despite its impact on the country's 2009 budget. The payment will be spread over two years and will be broken into three phases, 50, 25, and 25 per cent. ¶7. President Yayi also used the dismissal opportunity to switch the portfolios of Gregoire Akofodji, the Minister of Industry and Roger Dovonou the Minister of Agriculture, Animal Husbandry, and Fishing. Yayi changed Dovonou's portfolio political reasons. According to the Permanent Secretary of the Cotton Stakeholders Association, Barthelemy Gagnon, President Yayi did not fully give way to political pressure from some members of the political coalition endorsing his policy, demanding Dovonou's dismissal and his replacement by another political figure from the same town as Dovonou. President Yayi switched his portfolio instead. RAWLINGS