CHAPTER TWO: HISTORICAL CONTEXT AND CURRENT CHALLENGES __________________________________________________________________________ 80. These initiatives – which were subject to the willingness of the authorities of the new independent state to take over after the colonial period – were completed by private industries, particularly in the sectors of soap production, the manufacture of metal structures, the assembly of Citroën vehicles, the production of pasta, the assembly of bicycles and motorcycles, and the manufacture of Bata shoes. Despite these initiatives, the private industries had little weight in the economy of this period. 81. Significant industrial investments were made between 1972 and 1989. There was a move towards nationalisation and the creation of state-owned and mixed-economy enterprises. Accumulated investments totalled 17.5 billion CFA franc in 1979, a figure never attained before. The country benefited most from these investments in 1974 and 1975. The industrial fabric was never as dense as during this period and comprised more than 20 production plants of all kinds. Nevertheless, the country was severely affected by economic crisis and drought, which led its leaders to declare Benin a ‘disaster country’ in January 1984 and to solicit international aid as a matter of urgency. 82. During the 1990s, Benin recorded satisfactory macroeconomic results with an annual growth rate of around 5% and a contained rate of inflation. Indeed, the average growth recorded during the 1991-1996 period was 4.1%, and 5.2% was recorded for the period 1997 to 20015. However, after 2001, the pillars of the economy of Benin showed signs of weakness. This slowed economic activity between 2003 and 2004. 83. Extremely dependent on trade with Nigeria, the Beninese economy was particularly vulnerable to the decisions taken by its neighbour to tighten restrictions on imports after the end of 2003: the actual growth rate of the economy continued to decline and reached 3.4% in 2004, compared to 3.9% in 20036. With the population growing at a rate of 3.1%, poverty reduction can only be very slow. 84. The economic slowdown may be attributed to both economic and structural factors. Indeed, 2004 was characterised by a difficult regional and international environment. The most notable of these difficulties were the maintenance of trade restrictions imposed by Nigeria on the re-exportation of goods from Benin, and unfavourable oil and cotton prices. This vulnerability of the Beninese economy to external shocks also resulted from the delay in implementing the structural reforms initiated in the 1990s4. 85. This slowdown continued in 2005, with a growth rate of 2.9% according to data released by the IMF7. Nevertheless, there was a slight but sustained growth to 4.1% in 2006. There were also optimistic forecasts for 2007 and 2008, estimated at 4.7% and 5.2% respectively, according to the same source. 5 INSAE. National Accounts. OCDE: Perspectives économiques en Afrique 2005/2006 – Etudes par pays: Bénin [OECD (Organisation for Economic Co-operation and Development): Economic prospects in Africa 2005/2006 – Country Studies: Benin] 7 IMF. World Economic Outlook. April 2007. 6 53