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Published on : Saturday, March 26, 2016
The Board of the World Bank Group approved a US$50 million International Development Association (IDA) credit to help Benin develop its tourism sector, the country’s second largest source of foreign exchange earnings and third largest employer, after agriculture and commerce. It will reduce the vulnerability of the economy induced by high dependency on informal trade with Nigeria and the cotton sector.
The new Benin Cross Border Tourism and Competitiveness project (CBTCP) supports the key pillars of Benin’s growth and poverty reduction strategy, namely growth and redistribution, and is well aligned with the World Bank Group’s twin goals of ending poverty and boosting shared prosperity. By helping increase cross-border tourism and private sector investment in the country’s selected key touristic destinations (mainly Abomey-Calavi, Cotonou, Ouidah) and value chains, the CBTCP will help over 1 000 local tourist firms (of which 20 percent are led by female entrepreneurs) expand their economic opportunities and create jobs.
“Benin has a natural comparative advantage and possesses important prerequisites for successful tourism development, including endogenous natural and cultural assets clustered around a compact coastal region and close to key potential source markets”, said Pierre Laporte, the World Bank Country Director for Benin, Burkina Faso, Côte d’Ivoire, Guinea and Togo. “If efforts are made to meet this potential, tourism’s direct contribution to the country’s GDP could be increased up to 30 percent and could generate an estimated 30,000 additional jobs”, he added.
A key constraint for the development of tourism in Benin is that many private operators in the sector lack the minimum capacity to apply for loans, and that the banks have a weak appetite to deal with such loans. The CBTCP will increase incentives for financial institutions to lend and support tourism-related micro, small and medium sized enterprises (MSMEs): “Through a joint risk-sharing facility, the World Bank and the International Finance Corporation (IFC) will encourage private commercial banks and other financial intermediaries to serve a new cohort of MSME clients by partially mitigating creditor risks through first-loss cover”, Pierre Laporte indicated.
The CBTCP will be implemented during a 5-year period, from 2016 to 2021. It supports the implementation of Benin’s tourism policy for 2013-2025 which aims to (i) increase and improve the touristic offer by upgrading sites, infrastructure, skills and quality of services; (ii) promote tourism through marketing, branding and ecotourism development; and (iii) reinforce the managerial and sectoral capacities by improving the institutional, legislative and regulatory frameworks, statistics and sectoral financing sources.