EXECUTIVE SUMMARY __________________________________________________________________________ of unpaid loans, they only partially meet the needs of Benin’s economy and investors. The banks’ relatively low credit extension into the economy, their limited geographic coverage of the country and penetration of markets, as well as the low medium- and long-term credits, demonstrate the progress that still needs to be made. This also accounts for the rapid decline of bank financing in the face of informal finance and micro-finance, which only partially meet the needs of modernising enterprises and the economy in Benin. While the banking sector deplores the lack of entrepreneurial spirit and bankable projects, it seems that the issue of guarantees – especially with regard to land and complex formalities – underlies a sort of self-rationing on the part of companies in the face of difficulties in dealing with the formal banking sector. 3.53 Other main constraints and weaknesses of the business environment in Benin include:  Corruption that costs the country about 3% of its GDP and costs enterprises 8.4% of their turnover, according to official estimates.  Lack of confidence in the efficiency of the administration and judicial system: 54% of Benin’s enterprises consider the administration to be inefficient or ineffective and in the event of dispute, 55% of the businesspeople prefer to settle their debts out of court.  The burden of regulations: Administrative structures seem to have maintained the habits of the socialist management system. Managers of manufacturing firms declare that they devote about 8.3% of their time to fulfilling administrative formalities, while 65% of export and/or import firms consider customs clearance operations to be bad or very bad.  The lack of well trained, specialised and competent human resources and human resource supervision.  The state of infrastructure: Electricity, water and roads pose difficulties, as do insecurity and information and communication technologies (ICTs). 3.54 Legality of actions by enterprises and businesspeople in Benin. Wherever the CRM held discussions with stakeholders, the inefficiency of the judicial system was mentioned as an obstacle to the development of enterprises. Consequently, the shortcomings of Benin’s legal framework and fear of endless proceedings in court force some players in the economy to settle their disputes through family networks or traditional authorities, who are deemed more reliable, faster and less corrupt than the ‘modern’ networks. 3.55 With little confidence in their legal environment, Beninese enterprises only partially fulfil their obligations to the various stakeholders in their environment:  18 Tax evasion is quite significant as taxes constitute a heavy burden on the formal sector. This sector, though not always convinced of the fairness of