Benin's economy is recovering from the economic problems that led to the collapse of the socialist government in power between 1974 and 1989. Privatization of previously nationalized companies was current policy in 2001, and was expected to continue in telecommunications, water, electricity, and agriculture. However, recovery efforts are complicated by the fact that Benin's economy is strongly influenced by economic trends, especially fuel prices, in Nigeria. Over the past decade, this effect has caused Benin's GDP to fluctuate between recovery and decline. Benin's debt situation has been eased due to measures undertaken by the Paris Club and other creditors.
Agriculture is the most important sector in the Benin economy, accounting for some 36% of GDP (2001). About 90% of this output is produced on family farms using low-technology inputs and focusing primarily on domestically consumed crops, such as maize, sorghum, millet, paddy rice, cassava, yams, and beans. Typically, Benin is self-sufficient in food. Cotton, palm oil, and groundnuts are grown and exchanged for cash.
Benin's livestock population increased an estimated 40% during the late 1980s and early 1990s, though it still does not satisfy local demand. Wood production for local fuel consumption also falls behind national demand. The fishing sector, made up of artisanal fishers, has overfished the stock and is in decline.
Benin's mineral resources are limited. Limestone, marble, and petroleum reserves are exploited commercially. Gold is produced at the artisanal level. Phosphates, chromium, rutile, and iron ore have been located in the north but remain undeveloped resources.
In January 1994 France devalued the CFA franc, causing its value to drop in half overnight. The devaluation was designed to encourage new investment, particularly in the export sectors of the economy, and discourage the use of hard currency reserves to buy products that could be grown domestically. In the short term, the move left the economy reeling and provoked anger and confusion among the population. Price-gouging by local merchants and a sharp rise in inflation to 55% led the government to impose temporary price controls on existing stocks of imports. By 2001, however, inflation was back down to 3% and growth was estimated at between 5–6%. The government was pursuing liberal economic policies, but rapid population growth, inefficient state-owned enterprises, and high civil service salaries continue to offset economic growth. Corruption remains a major obstacle to economic development.