In Benin, top businesspeople not only capture the economy but also the executive, and possibly legislative power. This book develops a comprehensive analysis aimed at identifying and reducing the institutional constraints that impede Benins rapid, sustainable, and inclusive development. The research reveals a chain of causality between four main categories of institutional weaknesses in Benin, namely corruption, inefficiencies in governance, opacity in public decision-making, and excessive informality in the Beninese economy. These institutional weaknesses are traced back to proximate and ultimate causes. The immediate causes include political instability, elite capture of key state functions, weakness of the state, and the possibility of easy but illegal rents. In turn, these causes are linked to deep-rooted underlying factors such as the nature of the political game, essentially neo-patrimonialism with multiple economic and/or political Big Men, but also geographical or ethnic factors. We elaborate on policy reforms aiming at overcoming or circumventing these institutional problems.

This chapter traces the complex trajectory of land tenure reforms in Benin since the democratic transition and liberalisation of the economy in the early 1990s. It shows that conceptions of the problem of land tenure insecurity and the responses to it have often clashed. Attention paid to sectors (rural vs urban) has varied as well as the timing and the nature of land tenure reforms. The solution of formal land titling propounded by international donor and local supporters has been considered by many as both inaccessible and unsuited to the needs of the majority of the population, hence the search for legal and institutional alternatives. This history of land reforms reveals intricate conflicts involving corporatist struggles, conflicts of interest between different stakeholders, and divergent social choices. It highlights the political economy dimension of land tenure problems and their instrumentalisation by some actors and competing public policy networks, the strengths and limitations of attempts to implement policy reforms, and the influence of donors in reform processes. It also questions the capacity of the intended reforms to modify practices and have enough inclusiveness.

It is widely accepted that countries’ institutions play a major role in their economic development. Yet, the way they affect, and are affected by, development, and how to reform them are still poorly understood. In this companion volume, State and Business in Tanzania diagnoses the main weaknesses, root causes, and developmental consequences of Tanzania’s institutions, and shows that the uncertainty surrounding its development paths and its difficulty in truly ‘taking off’ are related to institutional challenges. Based on a thorough account of the economic, social, and political development of the country, this diagnostic offers evidence on the quality of its institutions and a detailed analysis of critical institution- and development-sensitive areas among which state-business relations rank high, even though the institutional features of land management, civil service and the power sector are shown to be also of prime importance. This title is also available as Open Access.

Benin–Nigeria relations are characterised by two-way informal cross-border trade (ICBT) facilitated through their long, porous border. First, Benin imports consumer goods that are subject to high import protection in Nigeria and then transships them to Nigeria through elaborate channels. Second, Benin illegally imports petroleum products from Nigeria, where consumer prices are highly subsidised. Also, consumer, intermediate, and capital goods are smuggled from Nigeria into Benin. This ICBT accounts for a significant share of Benin’s income, employment, and tax revenues on imported goods that are transferred to Nigeria. These benefits of ICBT to Benin, however, are very fragile as they are on the vagaries of economic policy in Nigeria. Moreover, ICBT has nurtured informality, corruption and political capture. It also crowds out private and public resources that could have been put to better use in agricultural and the manufacturing sectors. The way forward for Benin is to progressively move away from smuggling towards formal trade. Benin could aim to become a competitive, efficient regional centre for legal trade and services to its hinterland countries, as well as to Nigeria.

Despite rather satisfactory overall GDP growth rates (6 per cent), development has been slowed down by vigorous population growth (2.8 per cent) and made uncertain by the absence of a true growth engine. Recent growth performances result more from the effects of favourable terms of trade and foreign financing flows on domestic demand than from autonomous supply-driven growth. The issue of growth sustainability also arises in connection with high investment rates over the last few years. It is not clear whether the economy can maintain such a high rate of accumulation without heavily relying on foreign financing. Dependence on this is excessive. A third challenge is to be found on the social side. Poverty is declining only slowly, and social spending is limited. That growth has not trickled down more systematically to all segments of the population is a problem because it weakens the transformative role of development. Offshore natural gas reserves could soon provide more resources for Tanzania’s public sector. Yet natural resource windfalls are difficult to manage and may be a source of economic and institutional instability.

This chapter gathers information on the quality of Tanzanian institutions from various sources: international databases of governance/institutional indicators, a questionnaire survey among local actors in business, civil society, political, and academic circles, and in open-ended interviews with prominent decision makers and observers. The three approaches are convergent on the likely constraints that Tanzania’s institutions enact on economic development. Conclusions are a bit less clear in the case of synthetic institutional indicators, which tend to combine many different dimensions of institutions. Yet relative institutional weaknesses are readily apparent. What emerges more precisely from the three exercises are the following institutional weaknesses: 1) poor control of corruption; 2) the poor regulation of business, including state owned enterprises; 3) the ambiguous and complex legal system and management of land use rights; 4) the inefficient organisation of the civil service and delivery of public goods; and 5) the lack of coordination between state entities, including a strong centralisation bias, which does not exclude responsibility overlap.

As the main resource of a large population, land has been the subject of intense debate and dispute in Tanzania. This chapter analyses the existing system of land occupancy rights and its effectiveness in allocating land use rights and avoiding conflicts. The quasi-collectivised Ujamaa system imposed during the socialist era was short lived. The Land Act (1999) presently regulates land allocation. It distinguishes ‘village land’, consisting mostly of smallholders and governed by statutory laws, from ‘general land’, leased to officially agreed users and governed by statutory law. The key challenge is to regulate transfers from village to general land. The present system turns out to be complex, inefficient and conflictive because of the limited surveying of land, the lack of (computerised) recording of land operations, and the intricacy of the law, which generates numerous rent-seeking opportunities. According to Klaus Deininger’s discussion, faster progress can be achieved in surveying and recording because of low-cost technology. As for the law, several reports have been commissioned to evaluate it and to suggest possible reforms, but no changes have been forthcoming so far.