Benin Market Entry

Benin Market Entry

Basic conditions for the use of Czech goods on the market

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

According to cheeroutdoor.com, the Benin market is relatively small and the purchasing power of the majority of the population is low. The exporter should focus on the entire UEMOA/ECOWAS region. The customer focuses primarily on the price, the quality of the goods comes second – the ever-increasing imports of cheap Chinese goods represent a major competitive obstacle. In Benin, daily necessities are mostly sold in small shops and markets, of which there are many. Wholesale and distribution are mostly in the hands of Lebanese, Indian or Chinese companies. Lebanese and French shops and supermarkets exist only in large cities. Direct personal contact with the client and the price is a basic prerequisite for sales success. The best market entry strategy is through a local representative who works either on an “ad hoc” commission basis or on a long-term contractual basis. The most suitable for the supplier is, of course, to find a reputable partner who would work on his own account and pay for the offered goods himself when taking them. Forms of business “joint-venture” between domestic Beninese customers and foreign suppliers are proving to be effective. For any major case, it is essential that the local representative has good contacts with the local administration. Due to the number of frauds, there is always a thorough check of the partner (due diligence). The Czech Republic has not yet built any network of representatives in Benin who would regularly treat the local market. In the case of foodstuffs, such a representative could be the Czech company AMJ Group SE, which is also registered in Benin.

The Czech exporter especially needs invoices, in four copies, if possible in French or another world language, but with a French translation and a description of the goods attached. All invoices must include the names of the supplier and recipient of the goods, the name of the goods, the unit and total price and the quantity details. Furthermore, a Bill of Lading or Air Waybill, Packing List and Certificate of Origin (EUR1), proof of pre-shipping inspection (performed and issued by Bureau Veritas for the Government of Benin, in the case of importing animals or plants, also a veterinary document. The importer (Benin) must also present an importer’s card (Carte d’importateur), which is issued by the Center des Formalities des Enterprises (CFE). Goods up to a value of 3 million CFA can be imported into Benin without pre-inspection control. Imported goods must be insured. Physically, the goods are cleared by licensed customs agents at the behest of the (Benin) importer. Since 2011, the Société d’Exploitationdu Guichet Unique has been operating in the port of Cotonou and at the border crossing in Sémé, where, after presenting all the necessary documents mentioned above, importers issue the so-called Bordereau de Frais Unique; based on this document, the customs agent should clear the shipment within 24 hours.

Customs rates are common to all UEMOA states (revenue 02/97/C establishing a unified customs tariff and classification). No duty is applied to products with UEMOA and ECOWAS countries. Import duties from third countries vary depending on the type of imported goods. The Benin Customs Tariff distinguishes four basic categories:

  • Basic consumption goods (medicines, condoms, books and textbooks) – the rate is 0%
  • Basic raw material products for the industrial sector – 5% rate
  • Semi-finished products (especially the majority of imported food products) – the customs rate is 10%; ordinary consumer goods (alcoholic beverages, perfumes, electronics, but also milk, flour, frozen fish, fruit, etc.) – the rate is 20%.

From 1 January 2015, the so-called uniform external customs regime began to apply to all ECOWAS countries, which in the case of Benin does not differ from the basic rates mentioned above. At the “wish” of Nigeria, a fifth zone is being introduced – so-called goods threatening economic development, with a tariff rate of 35%. In addition, the so-called Taxe Statistique is paid for goods intended for re-export (5%), Taxe Conjoncturelle à l’Importation (10%), Taxe Dégressive de Protection (10-20%) and Le Prélèvement Communautaire de Solidarité (1%). Some products (tobacco, radio and television sets, cosmetics, soft drinks, beer, alcoholic drinks, flour and food oils) have special surcharges of 1-8%.

Export tax is paid on exports of crude oil, precious metals and stones, and cocoa beans. To export gold and gems, the exporter must have a license from the Ministry of Finance. In Benin, there are no import restrictions or bans, except for weapons and military equipment (the import of which is subject to approval at the level of the highest bodies of the ECOWAS community of countries – the secretariat in Abuja), drugs and environmentally hazardous goods.

Forms and conditions of operation on the market

On January 1, 1998, an agreement between the 15 African countries of the CFA currency area (and Guinea) called OHADA (Organisation pour l’Harmonisation du Droit des Affaires en Afrique) entered into force, which promotes the development of the African Economic Community, a common commercial policy and guarantees traders and investors legal certainty and compatibility. Benin has acceded to the OHADA agreement and commercial law here does not differ from European (French) law, with exceptions. Both domestic and foreign companies can operate in the so-called regime A (one owner) or regime B, including “Société a Responsabilité Limitée” (sro) or “Société Anonyme”. Foreign investors can own all shares in the company, only certain basic and different minimum capital requirements apply. Foreign companies registered in Benin have the same rights under the law as local companies. The same regulations and rules also apply to their registration. In 2010, the “Guichet Unique” office was established to handle all the formalities associated with company registration. We recommend setting up your company with the help of a local lawyer with knowledge of the language and French commercial law. More information. The rules for setting up an office are codified in the Commercial Code and implementing regulations, the procedure is basically similar to that in the Czech Republic. The company is established at the founding general meeting, where the founding partners or their representatives meet (power of attorney certified by a Czech notary in French or with an official translation, in the case of natural persons a copy of the passport or OP, in the case of legal entities, an extract from the OR with translation). The capital is deposited into a bank account. The partnership agreement must include, among other things, the exact name and registered office of the company, legal form, share capital, date of establishment, names of all statutory representatives. Supporting documents must be officially translated into French. All documents are then written in French in Benin. The company is then registered in the commercial register, then it registers with the Benin Chamber of Commerce and Industry, with the tax office and must apply for a company registration number with the social office; for this, you need 4 copies of the partnership agreement certified by a notary, an extract from the criminal record of the statutory representatives, a certified copy of the OP or passport of the partners, in the case of foreigners also a residence permit, proof of the deposit of the basic assets in the bank (account statement), 3 photos of the partners. The incorporation of the company must be published in the newspaper La Nation. Guichet unique is also a place where you can subsequently process the business card of an entrepreneur, importer, etc.

Marketing and communication

Media advertising has the greatest effect, especially for goods with a fast turnover. TV advertising, newspapers, radio, magazines, large-scale billboards, the Internet or even mobile phones can be used. The best sales strategy is then direct marketing. In the field of offers and sales of common consumer and engineering commodities, the biggest burden of acquisition activity rests on the local representative. Personal contact with customers or institutions is the most important. For the supply of investment units, direct contacts with state administrative bodies and relevant ministries and appropriate lobbying have so far had the greatest effect. There are no PR agencies. this is a conservative environment, therefore we do not recommend provocative content.

Issues of intellectual property protection

Rights must be registered locally and enforced under local laws. The trademark owner should register it in Benin. Benin has adopted laws promulgated by the African Intellectual Property Office (OAPI, based in Yaoundé), which aims, among other things, to protect patents. A patent enjoys protection for 10 years, it can be extended after 5 years. A trademark is valid for 20 years and can be renewed after 10 years. As a member of the OAPI, Benin has accepted a number of obligations arising from international treaties for the protection of patents, intellectual property, including the Paris and Berne Agreements and the agreement establishing the World Intellectual Property Organization. As a WTO member, Benin is a signatory to the TRIPS Agreement. Benin is also a member country of WIPO (World Intellectual Property Organization). Despite active participation in these international conventions, the ban on counterfeit imports and the Benin government’s declared interest in protecting intellectual property rights have done very little to stop the sale of pirated music recordings, videotapes, computer software, etc. The country is literally flooded with fakes and pirated copies of virtually all branded goods (mostly from China). Practical enforcement of laws is not consistent, judicial and other enforcement of rights is slow and ineffective. As a prevention, it can put together an appropriate contractual treatment or use the procedures applied in case of infringement in other countries to which the company supplies.

Public procurement market

Public contracts (so-called tenders) are published in the government newspaper La Nation and on the website of the Ministry of Finance. They usually include the mandatory participation of a Beninese entity. Even in Benin, it is impossible to enter a competition for larger tenders without preparation and survey of the terrain, knowledge of local competition and conditions. Participation in contract tenders requires long-term monitoring of the situation with the necessary preliminary lobbying of the relevant central authorities and provision of relevant information even before the official announcement of tender conditions. This is practically impossible without a permanent presence on the local market.

Payment terms, payment ethics and resolution of commercial disputes

Even in Benin, a well-drafted commercial contract (preferably by a local lawyer) is of fundamental importance in resolving commercial disputes. Commercial disputes in Benin are resolved by the arbitration center (Le Center d’Arbitrage, de Médiation et de Conciliation) established by the Chamber of Industry and Commerce, before the civil courts. However, the resolution of disputes is usually associated with high costs and the enforcement of law is very difficult and lengthy. A foreigner will always be at a disadvantage against a local entity. Furthermore, full knowledge of French law and procedural customs is always required. Therefore, it is strongly recommended to resolve the dispute by agreement to avoid lengthy and costly negotiations and out-of-court settlements. It is advisable to prepare any contract with the help of a local lawyer. Claims and financial performance are difficult to enforce due to slow and corrupt courts (which are also subject to local lobbies and political pressures). When communicating with the authorities and during the actual implementation of business cases, it is always necessary to take into account the huge bureaucracy and the inflexibility of the authorities’ approach to solving all problems.

Benin respects international arbitration in the settlement of disputes between foreign investors and the state – it is a member of the International Center for Settlement of Investment Disputes (ICSID) and the New York Convention of 1958. Benin is a member of the WTO, and has also signed the convention prepared by the OHADA organization (Organisation pour l’Harmonisation des Droits des Affaires en Afrique).

It is best to negotiate payment terms contractually, and it is best to demand payment in advance. Invoices are due within about a month.

Visas, fees, specific conditions for traveling to the territory

A bilateral visa regime applies between the Czech Republic and Benin. The Embassy of the Czech Republic with diplomatic and consular jurisdiction for Benin is located in Abuja, Nigeria.

The Embassy of the Republic of Benin covering the Czech Republic is located in Berlin, Englerallee 23, tel.: 004930-2363 1470.

It is also possible to apply for a visa at the honorary consulate of the Republic of Benin in Prague, Ke Kaménce 364/17, 163 00 Prague 6 – Řepy, phone: 235 312 218.

The Embassy of the Czech Republic in Abuja recommends that travelers to the Republic of Benin be met at the airport by a local business partner or another serious person familiar with local conditions. It is possible to travel to Benin by air either directly (Air France) or via Lagos in Nigeria (British Airways, Lufthansa, KLM, Swissair, Alitalia, Air France, Iberia, Virgin Atlantic, Emirates). It is relatively easy to travel from Lagos to Cotonou by car (130 km), but this short journey can take up to 8 hours in rush hours. The ASKY airline provides connections between the capitals of West and Central African states. Before traveling to the countries of the West African region, every traveler should visit a professional doctor specializing in tropical diseases (in Prague, for example, the Clinic of Geographical Medicine of the Vinohrady Royal Hospital or the Center for Travel Medicine), where all recommended vaccinations can be completed – against yellow fever (mandatory, confirmation may be required at the airport), jaundice type A and B, typhoid, meningitis, cholera and tetanus. There is no vaccination against malaria. For a short stay, preliminary antimalarial prophylaxis is recommended, while resistance to individual drugs develops over time. Therefore, the type of antimalarial used must be consulted with a specialist in tropical diseases before departure. Common antimalarials include, for example, Lariam and Malaron. When the slightest symptoms of any disease (flu, angina, headaches, feelings of fatigue) appear, it is necessary to visit the nearest hospital and have a malaria test done. This is very simple (taking a blood sample from the pad of the finger on the hand) and fast – it takes about 15 minutes, including blood analysis. Medicines for ongoing malaria are freely available in Benin and are effective – the disease subsides within two to three days. It is essential not to let the disease develop (the incubation period of malaria is about a week) – then it can have very serious consequences. It can also be recommended that the traveler buys one pack of local antimalarial drugs in the destination country and takes it back to the Czech Republic with him. Due to the incubation period, malaria can manifest itself only after returning to the homeland, and its occurrence and thus its treatment could cause problems in the Czech Republic. Daytime travel is fairly safe by West African standards, but it’s always good to have a partner with local knowledge. As anywhere in the world, caution should be exercised, eg not showing large sums of money or jewellery. At the border with Nigeria, armed robberies on the main routes are increasing, it is necessary to avoid traveling at night (the risk of an accident also increases). Some areas of Cotonou (port, beach) are dangerous at night. We recommend traveling to the border areas with Nigeria (between Parakou and Malanville and W National Park) only if necessary. The biggest danger for the visitor is probably a traffic accident. The technical condition of the vehicles is often poor, and traffic chaos reigns on the roads and city streets. Drivers often do not comply with valid traffic regulations, moving on busy streets is quite dangerous – especially for pedestrians.

We recommend using bottled water, it is available everywhere. The hotels are of a good standard, however, we recommend using those that are part of international networks – they provide European service standards. Payment cards are suitable for payments in hotels, larger restaurants and supermarkets, otherwise for small purchases at markets, for taxis, we recommend exchanging them (at the hotel, at the airport). It is possible to rent a vehicle directly at the airport or use longer taxi services – by agreement.

ZÚ recommends that travelers register in the DROZD database.

Private French clinics of a good standard are in operation in Porto Novo and Cotonou. Even in the countryside, every village has at least an ambulatory infirmary for the provision of first aid. Medical care must be paid for on the spot. It is therefore necessary to take out additional travel insurance that covers medical expenses and includes possible evacuation to the Czech Republic.

Employment of citizens from the Czech Republic

According to the available information, the employer must obtain a work permit for the future employee from the Ministry of Labor and Public Administration (this is issued for one year, after this period an extension must be requested). For this, an employment contract must be submitted (foreigners must have a fixed-term contract). Based on the work permit, the employee can apply for a work visa. The minimum wage of approx. 60000 XOF for a local employee will certainly not be enough for a foreign employee. Health care is paid out of pocket, so we recommend arranging international medical benefits insurance.

Fairs and events

No major international fairs are held in Benin, national exhibition events (furniture, agriculture, etc.) are held in Cotonou.

 

Practical telephone numbers (emergency services, police, firemen, information lines, etc.)

  • Emergency department: (1)15, +229 21 307 336
  • Firefighters: (1)18 • Police: (1)17 dial the area code 112 from your mobile phone
  • Information: 122
  • Airport: +229 21 30 14 13
  • Ambulance: +229 21 301 760 / +229 21 300 656
  • Hospital (CNHU): +229 21 300 155 / +229 21 300 556; CNHU hotline: +229 21 304 652 / +229 21 077 945
  • Atinkanmey Clinic: +229 21 312 276
  • Cocotiers polyclinic: +229 21 301 420
  • Mahouna Clinic: +229 21 301 435
  • Police Directorate: +229 21 31 34 80
  • Central Commissariat: +229 21 30 23 10, +229 21 30 05 14, +229 21 30 22 46

Important web links and contacts

  • www.eiu.com,
  • www.izf.net,
  • https://lanationbenin.info/

Benin Market Entry