Benin's Coup Attempt: Growth Disruptions and Investment Opportunity Assessment

The December 2024 coup attempt led by Lt. Col. Pascal Tigri unfolded with military forces attacking President Patrice Talon's residence in Porto-Novo and seizing state television, declaring Talon "removed from office." The abrupt takeover, which left the president's whereabouts uncertain, marked a sharp escalation in West African political instability but did not immediately derail Benin's economic operations according to reports and as reported.

While infrastructure and media were disrupted, Benin's economy showed resilience in the short term. No prolonged disruptions to trade or financial markets followed, suggesting strong institutional buffers and decentralized economic activity. However, regional monitoring of potential sanctions or aid suspensions by global actors remains a latent risk, as such measures could strain Benin's trade-dependent economy if enacted.

The coup's regional spillover effects echo Niger's 2023 crisis, where military rule forced neighboring states to reroute trade through costly alternate ports, increasing logistics expenses and dependency on congested hubs. Benin's proximity to Mali and Burkina Faso-both under military rule-amplifies these risks, according to regional analysis, complicating cross-border commerce and heightening security-related trade frictions.

Despite these challenges, Benin's immediate economic fallout appeared limited. Its partial sanctions relief in 2024 and diversified trade partnerships helped mitigate disruption, though the unresolved political crisis and regional instability continue to cast a shadow over long-term growth prospects.

Growth Drivers Under Pressure: Resilience and Upside Potential

Benin's economy demonstrated remarkable resilience with 7.5% GDP growth in 2024, powered by infrastructure investments, agro-processing expansion, and development of the Glo-Djigbé Industrial Zone (GDIZ). Government reforms streamlined business registration and guaranteed equal treatment for foreign investors, improving the overall investment climate.

The push into renewable energy and ICT sectors has generated significant opportunities, with growing potential for market penetration as infrastructure expands. But this momentum faces headwinds from persistent risks including political tensions, judicial inefficiencies, and northern insecurity that continue to hinder broader economic potential.

Meanwhile, political instability marked by contested elections and opposition protests undermines investor confidence despite these economic gains according to the BTI report. External shocks like the Russia-Ukraine war and regional terrorism threats further strain Benin's resilience while judicial delays and security challenges in the north threaten long-term stability.

Despite these challenges, the government's reform agenda offers upside potential. Continued progress in streamlining regulations and improving security could unlock greater investment in key sectors. While the 2023 legislative election showed cautious democratic progress with increased opposition participation, sustained judicial reforms remain critical to translate current growth into lasting development.

Political and Economic Risk Assessment

Benin's stability faces acute pressure from regional turmoil and domestic governance challenges. The surge in West African coups since 2023, including Niger, reflects deepening socioeconomic crises and politicized militaries, creating a self-reinforcing instability cycle that undermines investment climates and infrastructure development. This environment directly threatens electricity access-a critical economic driver-as cross-country studies show political upheavals reduce infrastructure investment and maintenance, worsening energy poverty and deterring foreign capital. The recent thwarted coup plot in September 2024, involving high-level corruption attempts, underscores persistent governance vulnerabilities despite swift arrests of plotters. While the crackdown demonstrates state responsiveness, it highlights ongoing risks of electoral violence and institutional fragility that could erode investor confidence.

Trade dependencies further amplify systemic vulnerabilities. Benin's economy, reliant on Niger for 60% of cross-border commerce, faces acute disruption from the Niger crisis, including costly rerouting via Togo and Burkina Faso after ECOWAS sanctions. This trade fragmentation strained Benin's port-driven commerce and forced IMF growth revisions to 5.4% in 2023. Diversification into alternative routes remains critical but requires significant logistical adjustments and increased costs, testing Benin's economic resilience.

Mitigation hinges on regional cooperation and governance reforms. International mediation efforts, such as former leaders' June 2024 negotiations, aim to rebuild trust, while diversification into Togo and Burkina Faso trade corridors offers short-term relief. Longer-term solutions require addressing root causes: reducing military politicization, aligning foreign aid with local needs, and strengthening civilian oversight-strategies proven to break instability cycles. Success depends on sustained political will and international support to transform these pathways into durable stability mechanisms.

Key Risks & Mitigation:
- Instability cycles: Geopolitical shocks (e.g., Russia-backed juntas) prioritize regime survival over reforms, demanding urgent governance restructuring.
- Trade fragility: Diversifying supply chains reduces dependency but requires strategic port investments and regional partnerships.
- Governance gaps: Crackdowns on coups show responsiveness but need systemic reforms to prevent recurrence.

Growth Catalysts and Risks Amid Political Uncertainty

Benin's recent economic momentum-driven by 7.5% GDP growth in 2024-remains tethered to infrastructure and industrial zones like Glo-Djigbé, but political volatility now threatens to unravel progress according to investment reports. A thwarted coup plot in September 2024 according to the Democracy Tracker and a December 2025 military takeover as reported have exposed governance fragility, raising risks that foreign investors may delay commitments pending policy stability. Should regional bodies and international actors avoid sanctions, Benin could redirect resources toward stalled megaprojects, particularly renewable energy and agro-processing, which private capital is already eyeing.

Long-term growth logic remains intact: global demand for African textiles and green energy solutions aligns with Benin's strategic position in the ECOWAS bloc. Renewable energy adoption, already accelerating in the industrial zone, could unlock cheaper, reliable power for factories-boosting export competitiveness. Even indirect IMF support-focused on fiscal discipline and reforms-might stabilize investor sentiment if paired with credible anti-corruption measures, according to the IMF, though the Fund's current mandate lacks direct crisis intervention.

Yet risks linger. Governance gaps persist: judicial inefficiencies and northern insecurity deter SME financing, while trade disruptions from regional instability could delay imports for construction and manufacturing. If political tensions escalate, foreign aid suspensions might force austerity cuts to infrastructure budgets, creating a vicious cycle of underinvestment. Still, Benin's business-friendly reforms-like faster registration and equal investor treatment-offer a foundation to rebuild trust. For now, growth hinges on whether security improvements and policy consistency can outpace political shocks.