Benin Deep Dive — A looming founder boom shaped by legacy and modernity
An ancient regional power finding its own way in the West African ecosystem
From an economic and cultural perspective, the kingdom of Dahomey, established early in the 15th century on the borders of what is now known as the Republic of Benin, was one of the most prosperous kingdoms in pre-colonial West Africa for centuries. The kingdom was concentrated around three large city-states: Abomey, the largest; Ouidah, found on the shores of the Gulf of Guinea; and Porto-Novo, the modern-day capital of Benin.
Unlike its neighbours, the kingdom had a structured administration with rules regarding succession and power distribution; its people spoke a common language and followed a common faith, Vaudoun, which is far older than Christianity and retains considerable influence in the region. As a syncretic religion, Vaudoun has evolved and integrated many beliefs from other monotheist religions, Christianity especially. Yet, its essence, philosophy and set of values are still omnipresent in Benin, exerting an important cultural influence on public life.
Economically, the Dahomey kingdom thrived through trading palm oil and other agricultural products while also engaging in the slave trade until 1801, with the kingdom a regional economic power. This combination of economic strength, cultural cohesion and identity, and established political institutions allowed the Kingdom of Dahomey to face and resist different waves of foreign influence and colonisation. The kingdom was also commercially partnered with the Western powers — the Portuguese, French, and British — who all had commercial counters on the country’s shores until 1894, when King Béhanzin was exiled by France and Dahomey later integrated into France’s West African colonies in 1904, over a century later than countries such as Côte d’Ivoire or Sénégal. Cotonou, the French counter on the gulf of Guinea, became the economic centre of Benin, thanks to its location between the ocean and the rest of the country through the Ouémé river that crosses Bénin north to south.
Following its colonisation, the Kingdom of Dahomey and the rest of modern Benin would remain under France’s colonial umbrella until 1 August 1960, when it gained its independence as the Republic of Dahomey.
What would follow is a 30-year period that has inextricably shaped the country’s economy and nascent tech ecosystem.
From Dahomey to the Republic of Benin — 30 years of instability
Following its independence, Dahomey entered into a period of political instability with no less than 5 coups until 1972, when a revolutionary military government was established under Mathieu Kérékou. In 1975, the Republic of Dahomey officially changed its name to the Republic of Benin, with the next two decades characterised by a strong adherence to Marxism-Leninism. As a result, the government embarked on a program that sought to restructure society and redistribute wealth through a planned economy, with nationalism and socialism driving public economic thinking.
Similar to Algeria, which embarked on a similar state-led program to restructure its economy on statist lines, Benin’s economy became dependent on the state’s efforts to sustain industrialisation and agrarian reform. The practical result saw the number of state-owned companies in Benin rise from 12 in 1972 to over 120 in 1982. While the early 1980s saw Benin’s economy grow at high rates, an unfavourable international conjuncture, poor public management, and Nigeria closing its border with Benin — a key source of trade and revenue — took the country into bankruptcy, severely damaging the ruling regime that had come to power in 1980.
The 1990s were defined by the continuing fragility of the Benin economy, with it highly dependent on exports of products such as palm oil and cotton. Politically, positive changes occurred, with a new constitution ushered in that saw Marxism-Leninism abandoned and Benin officially becoming the Republic of Benin in March, 1990. Political stability becomes more normalised, with the government adopting a series of structural reforms to diversify its economy and strengthen its private sector.
While these years saw Benin’s GDP steadily grow (bar the odd decline), the foundations of its current economy — as of early 2023 — were already laid. Benin continues to rely heavily on agriculture exports, with informal services playing a dominant role in economic activity (basic street food, urban transportation, home services etc.)
In 2006, former African Development Bank (AfDB) president Thomas Boni Yayi became President of Benin with the firm intention of making the country’s economy healthier and more favourable to private sector development. In 2006, with Benin’s socio-economic indicators at their weakest, the country entered a second phase of structural reforms and investment in infrastructure with the help of international donor agencies (USAID, World Bank, UNPD, AFD and others). Similarly to what happened in Rwanda in the same period, Benin began to show positive signs of political will towards economic development. By 2023, it has become a showcase in the region for its administrative processes, ease of doing business and overall business environment (with caveats as explained below). While business has found it easier to operate in Benin, press freedom has declined significantly, with President Patrice Talon — elected in 2016 — increasingly centralising power through changes in the political system.
A nascent ecosystem, the tech diaspora, and early yet isolated initiatives
Given Benin’s political and economic history, its startup ecosystem functions in isolated pockets, with the liberalisation and profound transformation of Benin’s telecom sector a key driver of growth.
Critical to this liberalisation were two of the national operators, Areeba and Telecel, being acquired by foreign operators MTN and Etisalat in 2007. These changes occurred as more investment, supported by international aid, was dedicated to developing the country’s infrastructure, with access to roads, water sanitation, electricity, and internet connectivity increasing.
Access to the internet, especially, is an area where Benin has become a regional leader. Its fibre optic network of more than 3,000 km covers 86% of Benin’s different administrative regions and now reaches most people living in its largest urban centres. As a result, Benin is now one of the most advanced countries in the region in terms of connectivity infrastructure. These investments allowed Benin to increase its internet penetration rate from 20% in 2016 to +70% in 2022. Even as online penetration has increased, efforts to improve connectivity in the country are still ongoing, with Chinese aid playing an increasingly influential role.
In addition to increased internet penetration, the 2010s witnessed the return of the Beninese entrepreneur diaspora, who hoped to leverage prior success abroad (USA, Senegal, Côte d’Ivoire etc.) as a platform to invest in the nascent local ecosystem.
Senam Beheton, one of the ecosystem’s most important characters, came back to Benin after a successful entrepreneur career between Dakar and San Francisco to launch in 2014 the first incubator/venture builder in the country, TEKXL, in partnership with Ulrich Sossou, another seasoned entrepreneur who has since dedicated himself to the ecosystem’s future sustainability success (more on him later). In 2016, Beheton founded Etrilabs, the first startup accelerator in Benin.
Today, both TEKXL and Etrilabs, alongside SéméCity and the incubator UAC Valley, launched by the University Abomey Callavi, are the few entrepreneur support organisations (ESOs) that provide services aligned with international tech ecosystem standards. There are also some very promising initiatives seeking to increase female involvement in the nascent tech ecosystem, with Rachael Orumor among the leading players in this space. From an ecosystem-building perspective, there is also Amos Avoce, who created the Benin Fintech Association and recently launched 229Founders, the first startup studio in the country.
At the startup level, the 2010s witnessed the rise of interesting but isolated projects limited to the creativity and potential of their founder. The lack of structuration in the business landscape limits the demand side at all levels in the ecosystem, while the lack of support structures and an unfavourable legal framework increases the barriers to entry for entrepreneurship. In that context, Gilles Kounou founded Open SI in 2014 as an IT company before pivoting it to tech, launching two of the most successful tech products in the country: Kkiapay (mobile money payment aggregator platform) and Go Medical (platform to book medical appointments).
Sossou, as one of the most experienced entrepreneurs under 30, is an example of a serial founder, having launched and developed 5 successful products since 2016, including Takitiz and Botamp in 2016, Happier Co in 2018, and Irawo in 2020. A rarity in Africa, AS World Tech, a hardware startup developed by Richard Odjrado, designs computers, watches, and connected glasses in Benin, further highlighting the heterogeneous and isolated nature of entrepreneurial initiatives in Benin during this period.
Children of the ecosystem
The hatching of these initiatives was a concrete demonstration of the potential impact a robust startup ecosystem could have on the country’s development and the inclusion of its most vulnerable populations. Entrepreneurial dynamics in Nigeria, Ghana, Ivory Coast, and Senegal also created healthy competition among countries in the region, triggering a series of government actions to compete with their regional neighbours.
In Benin, these actions included the creation of a Digital Code in 2018, which followed the establishment of a Ministry of Digital Economy and Communications in 2016, the development of the Sèmè City project — a smart city dedicated to science and technology — and also the recent creation of a National Information Technology Development Agency to support coherence between ongoing and future digital transformation projects in Benin. These initiatives are testimony to the importance of the digital economy and entrepreneurship in Benin, with the government’s vision indicating a real understanding of the potential socio-economic benefits that could result. The country’s Startup Act is still pending, with ecosystem players expecting it to transform cumbersome legal and regulatory frameworks and create more incentives for startups through a healthier investment environment.
These public-led initiatives have trickled down into the country’s universities, with more and more programs dedicated to entrepreneurship and women empowerment, in addition to some noticeable incubators, such as UAC Valley, as noted earlier, near Cotonou. Along with the heavy involvement of international donor agencies (the United Nations Development Programme is the most active) and international tech companies such as Google, young graduates in Benin are offered a multitude of opportunities to join incubators, access funding and specific programmer training, and grow their networks to ideate, build, and launch ventures.
As a result of the changes that have gripped the ecosystem since the early 2000s, arguably, the first generation of homegrown tech entrepreneurs has emerged in Benin. These entrepreneurs share very similar but unique characteristics.
According to the CEEIIS report from the UNDP, more than 50% of Benin’s founders are under 30, 90% have a university degree, and +75% are in the ideation phase only. These traits are unique to Benin at present and demonstrate a certain coherence in the local ecosystem, along with a certain quality of profiles and projects. Yet, similarly to the ecosystem that hosts them, founders in Benin tend to be young and lack experience. The size of the local market and the legal environment also raise some significant challenges that require expertise and experience (scaling, exporting, investing etc.). In this context, ESOs and support programs in Benin will play a determining role in sustaining these young founders and turning them into role models for the next generation.
Similar to Rwanda (while contextually different), Benin’s recent history created an environment in which local corporates did not grow enough to play an important part in supporting the local startup ecosystem. The size of the local market, government economic orthodoxy and Benin’s proximity to Nigeria, the largest economy in the region (In Rwanda’s case, Kenya would be that regional power), have further undermined Benin’s ability to grow to a meaningful size. Also, it can be probably argued that being a neighbour to the most dominant startup scene in the continent siphons away investors from the country.
Furthermore, the investment landscape in Benin is yet to adapt to the market, with investment opportunities that focus mostly on Series A to B (> $3m) in a market where +80% of startups are desperately looking for seed investments or micro-finance. The Benin Business Angels Network (BBAN) is the only traditional investment vehicle tackling this missing middle, but it cannot answer all market needs on its own. In the non-traditional landscape, international donor agencies and foundations (such as The Tony Elumelu Foundation) are very active in trying to bridge the investment gap in Benin, but the mechanisms they can activate (donations, grants, competition) seem to have perverse effects on the projects supported, as already witnessed in Senegal and other countries of the region.
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An attraction power to activate
As already noted above, Rwanda is a very useful case study for the Benin ecosystem. In both cases, the following applies:
- The creation of a more robust local ecosystem is primarily drawn from a strong political vision driven by their respective governments
- Some disparate initiatives had existed before the government took a more active ecosystem role, with these initiatives isolated in a landscape with no corporates and ESOs support for local founders
- A deep administrative transformation occurred that resulted in a much healthier business and political environment
- Neighbours to regional economic giants with a high level of dependency
- Comparatively high levels of infrastructure (fibre internet, electricity, drinking water) and an affordable cost of living prices (housing, food, transportation)
Rwanda understood these conditions back in 2016 and prioritised promoting itself as an attractive destination for international capital, with its tech ecosystem a critical pillar of its development strategy. Benin’s government has recently embarked on a similar journey.
Its relatively youthful founder class, an absence of pre-existing ESOs and VCs in the country, and higher-than-average government support of the ecosystem suggest that in the coming decades, Benin may become a bright spot of tech development and innovation, defined by its own local context. Whether the Benin tech ecosystem reaches this point is open to debate, but what cannot be denied is that an opportunity exists for several founders to make an outsized impact on their local market in ways founders in Nigeria and Kenya were dreaming of 10 to 20 years ago.
Abderrahmane Chaoui is an African ecosystem researcher, consultant, and writer.
