Economics

What Are The Major Natural Resources Of Benin?

Benin has limited natural resources.

Benin’s major natural resources can be seen in the country’s main export items which are cotton, cashews, seafood, and butter. Due to the country’s favorable climatic conditions, Benin is known for its agriculture which is the country’s primary economic activity. Agriculture employs virtually all rural residents of Benin either indirectly or directly. Agricultural commodities are the country’s chief export items. Agricultural products sourced from Benin include cotton, with the country having the fourth-largest output of the crop in the continent. Fish is another important natural resource of Benin due to the richness of its rivers and coastal features such as lagoons. Apart from agriculture, the country was once known for its oil production. Oil was first discovered in the late 20th Century and was exploited until 2004 when production ceased. However, there are plans to revamp the country’s oil industry, and oil production is expected to restart after many oil companies setting up shop in the country.

Cotton

Cotton is the number-one agricultural commodity in Benin and accounts for over 40% of the country’s GDP. The country is one the largest producer of cotton in Africa, taking the fourth position as the largest producer in the continent. As Benin’s most important export item, cotton accounts for an estimated 80% of the country’s annual exports. However, the cotton industry has been ailing for years when it was under the management of the government, and as a remedy, the government transferred the management of cotton to AIC, a private entity.

The results of proper management practices soon became apparent, with cotton production in the country soaring in the subsequent years. Cotton production in the 2016-2017 in Benin was among the highest to be recorded in the country. Between November 2016 and June 2017, a total of 0.453 million tons of cotton was produced in the country. To put the impressive production into perspective, the country produced a total of 0.26 million tons in the whole of 2017. The AIC had an unimpressive history in managing the country’s cotton and was blamed for the drop in cotton production witnessed in 2011-2012. The deplorable cotton production was the cause of the management of cotton being transferred to the government, a decision which was later rescinded.

Problems Facing the Cotton Industry 

The country’s cotton industry faces a myriad of problems, and the most paramount is the insufficient ginning capacity, the lack of proper storage facilities, and erratic weather conditions. Interestingly, the country did not have a major cotton processing plant for many years and, therefore, had to export the crop in its raw form. Cotton farmers also feel left out during the establishment of policies relevant to the cotton industry. Experts in the cotton industry believe that the best way of solving the issues facing the industry is adopting a model where farmers from one region form associations which work closely with local ginneries. This model has proven successful in neighboring Burkina Faso which also has a large cotton industry.

Oil

Benin is situated in a region known to harbor immense oil deposits particularly in offshore locations. The continent’s largest oil producer, Nigeria, neighbors Benin. Oil was first discovered in Benin in the early 1980s in an offshore oil field. Domestic production of oil in the country commenced in 1982 with a Norwegian oil company tasked with the oil production. The 1980s were the golden period in Benin’s oil industry, and oil production peaked in 1986 when the country was producing 8,000 barrels of oil each day. By 1991, Benin had risen to become a serious player in Africa’s oil industry, having an oil production of 1.3 million barrels. Oil had become among the country’s chief export commodities with the country exporting a total of 1.27 million barrels in 1990. However, the country has no functional oil refinery and so had to rely on imports of refined oil products. The domestic demand for petroleum products stood at over 12,000 barrels each day in 2002.

Oil production in the country began to decline in the 21st Century and had ceased altogether in 2004. Oil production was slated to restart in 2014 after a Nigerian company secured rights to produce oil from Benin’s offshore sites. According to estimates from the company, one of the offshore sites, the Seme block 1, has a potential to produce an average of 7,500 barrels of oil each day, which mirrors the peak production figures recorded in the 1980s. The immense oil deposits found in Benin’s offshore sites make the country attractive to major players in the oil industry. Major petroleum companies such as Petroleo Brasileiro, the South Atlantic Petroleum Company, and Royal Dutch Shell PLC have interests in the country’s offshore oil blocks. However, with plans to open an oil refinery not being voiced, the country will have to continue importing refined oil products.

Fish

Benin has a long coastline along the Atlantic Ocean. The coast sits on one of the richest fishing spots in the region, making fish another important natural resource of Benin. The country’s rivers and lagoons are also important sources of fish. Fish exports from the country were estimated to be 41,900 tons and valued at about $1.9 million in 2003. Interestingly, the biggest players in the fishing industry in Benin are foreign-based fishers including those from Senegal and Ghana, since the majority of Benin fishers practice small-scale fishing. One major player in the country’s fishing industry is Awa Fish which is involved in packaging and storing fish destined for local and international markets. The company works in a model that provides small-scale fishers in the country with a ready market for their fish which the company processes and sells to external markets. Awa Fish has the capacity of processing more than 700 tons of fish each year.

Problems Facing the Industries

One of the biggest headaches that players in virtually all industries face is an unreliable electricity supply. In a country that regularly experiences blackouts, the fishing processors have to use alternative sources of energy such as generators to power their fish storage facilities, which are expensive and unsustainable. Cotton ginneries also have to use the expensive generators due to the unreliable power in the country.

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