CHAPTER FOUR: ECONOMIC GOVERNANCE AND MANAGEMENT __________________________________________________________________________ 388. Financial system. The performance of the banking system, assessed in terms of compliance with prudential ratios, is sound on the whole. This is despite an increase in bad private sector debt (from 4.7% to 7.2%) caused by difficulties experienced by SONAPRA. Furthermore, the micro-finance sector has developed enormously throughout the country over the past 10 years, particularly in the poorest regions where banking penetration is low. With nearly 500,000 customers, the micro-finance sector in Benin is the most developed in WAEMU. However, efforts to build the capacity of MFIs should be pursued. 389. Debt relief. Benin has been benefiting from the HIPC Initiative since 2003, as well as from the Multilateral Debt Relief Initiative. Over the past three years, Benin has not accumulated any internal or external payment arrears. However, it should be pointed out that the sustainability of Benin’s public debt depends on several factors that can sometimes be unfavourable to the country. They include (especially) the heavy dependence on volatile cotton prices, the unfavourable changes in Nigeria’s trade policy towards Benin, and the appreciation in the value of the euro against the dollar. However, Benin is one of the 18 countries that will benefit from debt to multilateral creditors being cancelled. Table 4.3: Macroeconomic indicators (% of GDP unless otherwise indicated) Period before the Private Sector Recovery Programme I Private Sector Recovery Programme I period Average 1990-94 1995-99 2000-02 2003 2004 2005 20032005 Population (million) 4.9 5.8 6.6 7.0 7.2 7.4 7.2 Population growth rate (in %) 3.3 3.3 3.3 3.0 3.0 3.0 3.0 GDP (in billion CFA franc) 644 1319 1823 2067 2140 2299 2169 Per capita GDP (in thousand CFA franc) 131 228 277 296 298 310 302 Real GDP growth rate (in %) 3.7 5.1 5.2 3.9 3.1 2.9 3.3 Per capita growth rate (in %) 0.4 1.8 1.9 0.8 0.2 -0.1 0.3 Gross investment 14.4 18.2 18.9 20.3 20.7 17.0 19.3 Gross public investment 4.9 6.1 5.8 6.6 5.4 5.3 5.8 Gross private investment 9.5 12.1 13.2 13.7 15.3 11.6 13.5 144