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Benin's new Investment Code

By Mouhamed Kebe

Benin has adopted a new investment code (the Code), through Act No. 2020-02 of March 20, 2020 on the Investment Code in the Republic of Benin. This Code abrogates and replaces Act No. 90-002 of May 09, 1990 on the Investment Code and its further amendments.

The Code includes 54 sections that are exhaustive on the issues they address contrary to the former code whose provisions were not always complete. The Code contains a number of innovations ranging from the renewal of the institutional framework to the reorganisation of the tax regime, and a new of dispute resolution system. It is in line with the transparency requirement and investment attractiveness trend in West Africa.

This article reviews the main innovations of the Code in light of local and regional trends regarding investment legal regimes. 

Redesign of the authorisation regime (regime d’agrément)

The redesign is evident both in the typology of categories of sub-regimes contained in the authorisation regime and in the activities now excluded from this regime.

Whereas the former code provided for one common regime (régime de droit commun), five preferred regimes (A, B, C, D, E) and one special regime (artisanal businesses in particular1, the 2020 Code provides for one common law regime and preferred regimes consisting of three basic preferred regimes and two special regimes, the respective contents of which must be determined in the regulatory instruments implementing the Code. The basic preferential regimes (A, B, C) offer customs and tax advantages to national and foreign companies under Beninese law. As for the special privileged regimes (the sectoral incentive regime and the specific investment regimes), it should be noted that the first aims to support investments in economic activities or sectors deemed strategic for companies eligible for regimes A and B in accordance with a decree issued by the Beninese Council of Ministers and the second aims at facilitating the implementation of infrastructure and equipment projects for tourism, culture, sports, health and education.

The activities excluded from the authorisation regime include activities consisting of purchases for resale in the same condition, repackaging, cutting, modifying or packaging of finished or semi-finished products and all other activities that do not involve working or processing within the meaning of the customs nomenclature.2

Tax incentives and guarantees to investors

The Code offers clear and precise tax incentives and benefits and new guarantees to investors compared to the previous one.

Regarding tax incentives, it should be noted that the Code includes several advantages. Under regime A and during the period of operation, the investor benefits from exemptions on corporate income tax, the deposit on income tax, the flat-rate minimum tax, the exemption from the contribution of patents and licenses and a 50% reduction in the amount due as an employer's payment on salaries. Whereas in the former code, for this same category, the investor was only entitled, during the period of operation, to the exemption from the Industrial and Commercial Income Tax and the exemption from exit duties and taxes applicable to products prepared, manufactured and exported by the company.3

In addition, under regime B and during the period of operation, the Code gives the investor an exemption from corporate income tax, the deposit payment of income tax and the minimum flat tax, the exemption from the contribution of patents and licenses and the reduction of 80% of the amount due of the employer's payment on salaries4. In comparison, in the former code, it provided for the same regime and phases: exemption from exit duties and taxes, applicable to products prepared, manufactured and exported by the company and exemption from tax on industrial and commercial profits.5

Regarding guarantees, there are new provisions relating to protection of intellectual property rights including patents (brevets), trademarks and trade names, the protection of the private ownership of goods as well as all legal and commercial aspects of the property, its components and dismemberments, its transmission and the contracts to which they are subject. In addition, the state facilitates investors' access to developed industrial zones, agricultural land, industrial zones, and areas of interest or any other areas developed for investment in accordance with the regulations in force, without this being perceived by the investor as a performance requirement.

Local content and transparency requirements

There is a trend towards a certain accountability of investors in their dealings with local populations on the one hand, and the strengthening of transparency in the implementation of investments in the Code on the other hand.

Thus, international investors are urged to strengthen the know-how of local personnel through training and technology transfers.6 In addition, any company applying for one of the privileged regimes referred to in Article 4 of the 2020 Code must commit to contribute to increasing the qualification of its local employees, notably through continuing education, the development of their skills and technology transfers.7

In addition, the reinforcement of the requirement of transparency in the realization of investments is manifested in the Code through the explicit prohibition of any act of corruption and any act of related offences before, during or after its establishment by the investor,8 as well as the prohibition of the use of funds to realize the investment resulting from unlawful activities.9

Renewal of the institutional framework

In the former code, the formulation of the request for approval was made to the minister in charge of the plan followed by its examination and instruction by the Technical Investment Commission. This commission proposed the withdrawal of the approval if necessary and gave its reasoned opinion on requests for reimbursement of contributions to the national investment fund. Nowadays, there are three main state institutions in charge of investment promotion, namely:

  • The National Agency in charge of investment promotion, which is the technical body of the state that acts as a one-stop shop to facilitate the administrative formalities related to the approval of projects attached to the 2020 Code. It also ensures the monitoring of company specifications.10
  • The Investment Control Commission, which is responsible for verifying the conformity of investments, the respect of the investor's commitments and for certifying the end of the investor's installation period;11 and
  • The Interministerial Committee for Investment Promotion, which is the body responsible for monitoring and evaluating all investments that have benefited from the advantages provided for in the new Code. It also supervises, through its support unit, the activities of the National Agency in charge of investment promotion and those of the Investment Control Commission.12

New dispute resolution regime

Both the former and new Code provide for an amicable settlement procedure in the event of disputes between investors and the state. The resulting settlement agreement will undoubtedly take the place of law for the parties, who will endeavour to implement it as soon as possible.

The 2020 Code nevertheless adds that difficulties of interpretation of the provisions are settled by instructions (circulaires) of the Interministerial Committee for Investment Promotion on the proposal of the National Agency in charge of investment promotion.

In addition, the parties may, henceforth, agree to submit their dispute to the Arbitration, Mediation and Conciliation Centre (CAMeC) of Benin, the CCJA-OHADA (Common Court of Justice and Arbitration), the Multilateral Investment Guarantee Agency (MIGA) and Iinternational Centre for Settlement of Investment Disputes (ICSID).13 It should be noted that the choice of CAMeC and CCJA is justified by the fact that Benin hosts CAMeC on the one hand and is a member of OHADA of which the CCJA is one of the institutions. This recourse to the CCJA is also explained by the recent reform of OHADA arbitration law which is now expressly open to investment arbitration. 

Overall, the Code includes a number of innovations aimed at revising the authorisation regime (regime d’agrément), enhancing local content provisions and strengthening the protection of fundamental rights and transparency requirements.


1Article 11
3Article 39.2 of the former Code. It should be noted that those incentives was removed from the 2020 Code.
4Article 37.2
5Article 43.2 of the former Code. It should be noted that those incentives was removed from the 2020 Code.
6Article 21
7Article 23
8Article 25
10Article 8
11Article 9
12Article 10
13Article 45