BENIN ECONOMIC NEWS: JULY-AUGUST 2009

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SUBJECT: BENIN ECONOMIC NEWS: JULY-AUGUST 2009

REF: COTONOU 326

Presidential Lunch with Customs Officers
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1. On July 23, 2009, President Yayi had lunch at the Customs
Headquarters in Cotonou. Yayi used the opportunity to enquire about
the concerns of customs officers. They expressed concern over the
persistent rumor that Yayi intends to sign a law that will put
customs officers under military status, and condemned the practice
of political appointees, who disregard chain of command and the
expertise of the rank and file. The officers also said that the tax
exemption policy the GOB implemented to alleviate shock from the
global financial crisis and to help real estate developers build
CEN-SAD villas in 2008 negatively impacted customs offices' ability
to raise revenue. To boost performance, officers recommend a
computer network linking the main border posts to Headquarters
(Reftel),reorganizing the imported used vehicles sector, and
limiting tax exemptions granted to importers. Yayi told the customs
officers that he will take into account their recommendations,
promised to rid the Customs Administration sector of corrupt
officials, and urged them to carry out their work without paying
attention to hearsay about the GOB's alleged plan to switch their
status from the Ministry of Finance and Economy command to that of
the Ministry of Defense.

Investment Promotion Workshop in Benin
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2. On July 28, 2009, an investment promotion workshop was held in
Cotonou to define a new strategy to attract foreign direct
investment to Benin. The workshop's focus was on monitoring the
implementation of the conclusions of the United Nations Conference
on Trade and Development (UNCTAD) survey on investment policy in
Benin in 2004. The survey revealed that a poor business climate and
weak investment framework handicaps Benin's efforts to diversify its
economy. Jean-Marie Ehouzou, Beninese Minister of Foreign Affairs,
in his opening remarks acknowledged that Africa is unattractive to
investors because of the poor business climate and the lack of
investment protection.

BOAD Supports Food Safety in Benin
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3. On August 6, 2009, the Minister of Finance and Economy, Idriss
Daouda, and the President of the West African Development Bank,
(BOAD),Abdoulaye Bio Tchane, signed a credit agreement. BOAD
granted 9 billion CFA (USD 19.5 million) in credit to Benin to
finance the Food Security Project. This grant will cover financing
2,300 hectares of wetland for rice production and small-scale
farming, acquisition of a rice processing factory, and construction
of 12 food storage facilities in twenty four communes of the
country. The credit is expected to impact 2.6 million Beninese by
ensuring sufficient food production.

GOB Awards Bollore the Concession of the MCA's
New South Wharf
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4. On August 7, 2009, the GOB announced it has awarded the French
company, "Groupement Bollore et SMTC", the right to operate the new
wharf, which will be constructed within the framework of MCA's
Access to Markets Project at the Port of Cotonou. On August 12, the
Deputy Director of the Cotonou Port Authority, Lazare Gnonlonfin,
and the Chief of Staff of the Minister of Maritime Economy, Theodore
Glele, discussed with the press the process that led to the
selection of Bollore. They underlined that bidding was conducted by
a committee made up of MCA, MCC, and the World Bank, and was
assisted by "Societe Financiere Internationale". They stressed that
Bollore's selection was a prerequisite to the construction of the
new wharf because the bidder must integrate its infrastructure
witin the wharfconstruction process. They added that Bollore's
operations will generate annual revenue of at least 11 billion CFA
(USD 24 millions, contractual annual leasing fee). The press
conference was triggered by erroneous and slanted reporting in local
private newspapers that claimed the GOB had sold the Port of Cotonou
to Bollore.

British American Tobacco (BAT) Plant Shut Down
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5. On August 14, 2009, the Director General of BAT's subsidiary in
Benin, Jean-Pierre Quadric, announced that BAT will close down the
tobacco plant in Ouidah (40 KM West of Cotonou) on October 31,
leaving 33 people unemployed. Quadric explained that the continued
under use of the plant's capacity has generated a loss estimated at
over 10 billion CFA (USD 21.7 million). He noted that BAT
investment to increase the plant production capacity and export its
products to the WAEMU countries duty free has been hampered by
Cote-d'Ivoire and Burkina Faso authorities' refusal to allow
made-in-Benin tobacco imports. By the time Beninese authorities
solved the dispute, BAT's clients in these two countries had already
switched to its competitors' products. Quadric reassured that BAT
will stay in Benin to import and distribute tobacco products. BAT, a
British company, bought the tobacco plant in 1999 from the GOB. The
Plant was originally built by the Chinese.


Benin Fiber Optics Connection to Be Restored
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6. On July 24th, a boat's anchor cut Benin Telecoms' (BT) undersea
telecommunications SAT-3 cable, cutting Benin and BT's clients off
from internet connection and international calls. On 15 August 2009,
the Vessel Chamarel, which specializes in repairing submarine
cables, arrived in Beninese waters to begin repairing the fiber
optics cable situated 25 km offshore. The internet connection was
restored after 5 days of repairs.

BOUSTANI