75591
                                                                                              October 2012



                                   PPIAF Assistance in Benin
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Cotonou, Benin's largest city, has a population of more than 550,000 inhabitants spread over 70 km .
The city of Cotonou is very important not only because of its economic weight (57% of urban GDP and
33% of national GDP), but also because of its demographic weight (15% of the total population), which
justifies the introduction of significant funding in infrastructure and improvements to the urban
environment. To meet the growing needs of the urban population, a development plan for the city was
finalized in 2008 and covers the 2008–2017 period. However, as with most major African cities,
Cotonou is faced with the challenge of dealing with rapid urbanization and how to finance basic
services to improve the quality of people’s lives. The need to mobilize financial resources (e.g., tax
revenues) for operation and investment remain, as does the need to assess potential sources of
revenue. In order to improve the efficiency and transparency of its governance, the City of Cotonou
requested PPIAF support to finance an evaluation of its public finance management system using the
Public Expenditure and Financial Accountability (PEFA) methodology developed for local municipalities.

Technical Assistance through the Sub-National Technical Assistance (SNTA) Program

The objective of PPIAF’s SNTA program is to improve the borrowing capacity of local governments and
utilities by providing financing for credit ratings, creditworthiness enhancement programs, assistance in
the preparation of financing without sovereign guarantees, and for knowledge generation and
dissemination.

In 2011 the City of Cotonou requested PPIAF support, through its SNTA program, to fund the third
PEFA study in West Africa after the PPIAF-funded ones in Senegal in 2008 and Burkina Faso in 2010.
In particular, PPIAF assistance was requested to measure the performance of the city’s local public
finance management, to allow the municipality and its partners to better manage public finances, and
as a reference for overall performance analysis. This activity aimed to design an action plan to
strengthen the financial situation and management of Cotonou, and to enhance its capacity to access
financial markets and other sources without sovereign guarantees.

The results of the PEFA study indicated that the credibility of Cotonou’s budget was not satisfactory: the
rate of revenue mobilization was lower than 90% between 2008 and 2010, and there was a significant
accumulation of arrears of payments. In terms of completeness and transparency, the local budget was
not comprehensive because it did not mainly include operations on foreign-financed projects.
Furthermore, regarding the local policy-based budgeting, the process of preparing the budget of the
City of Cotonou was not found to be satisfactory because the budget calendar was not fixed, although
the budget vote was always on time. The budget of the municipality is prepared based on the Annual
Development Plans (the annual tranche of the Development Plan of the City of Cotonou), and the
design of budget does not fit into a multi-year perspective. The External Audit of the Commune by the
Chamber of Accounts is irregular. The latest audited accounts by the Accounting Chamber are those of
2003.

It is expected that the Agence Française de Développement (AFD) will provide Cotonou a €6 million
loan to support the rehabilitation and construction of five secondary markets, and in a second phase to
support the construction of a transportation infrastructure project that has yet to be defined. AFD is also
supporting the agglomeration of Cotonou through its €11 million PAACO project (projet d’appui
l’agglomération de Cotonou, Abomey-Calavi et Sèmè-Podji) to build infrastructure (more than 50,000
people benefit directly from the improvements induced by the construction of major drainage structures
and structuring roads in the three cities) and socio-community facilities. AFD is also analyzing the
possibility to grant another loan, which may vary between €2–€7 million based on the repayment
capacity of the city, by the end of 2012.

A workshop was held on February 13, 2012 at the Municipality of Cotonou’s Town Hall. It was attended
by a large number of Municipality managers and staff, government representatives, and representatives
from civil society, the World Bank, and AFD. They recommended a follow up PPIAF grant to improve
the Municipality’s finance management. Support from donors, particularly the World Bank, AFD, and


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PPIAF, was proposed to help the Municipality set up an action plan to improve its local finance
management, but has not yet been requested.

                          Results of PPIAF’s SNTA Program’s Activities in Benin

Category                             Outputs
Enabling environment reform

                                         Public Expenditure and Financial Accountability (PEFA) Study
Analyses/assessments prepared
                                          for the City of Cotonou, February 2012

Capacity and awareness building

                                         Workshop held at the Town Hall of the Municipality of Cotonou
Workshops/seminars
                                          to discuss the findings of the PEFA Study, February 13, 2012


Category                              Outcomes
Enabling environment reform
Institutions created or
                                         City of Cotonou strengthened
strengthened




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