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Benin’s petrol black market and the struggle for survival

by Sabine Cessou

A pioneer of African democracy, Benin is in the middle of the campaign for its presidential election on 28 February. But even if power changes hands democratically in this small nation bordering oil-rich Nigeria, the economy will still run, in part, on a black market for petrol – symptomatic of Benin’s weakened government.

Huge glass bottles, gleaming fluorescent green, appear by the roadside at night in Cotonou and Porto-Novo, Benin’s two biggest cities. Neon lights on wooden tables signal that someone is selling contraband petrol - kpayo - or “ersatz” in the local Gungbe language.

It’s smuggled across the porous 770-km border between Benin, a country of only 10 million people, and its giant eastern neighbour Nigeria, with a population of 177 million. Selling it is the only way for thousands of Beninese to earn a little money.

Achille and Marcel, brothers ages 21 and 17, tend to their stall on a boulevard near Cotonou’s Dantokpa Market, the city’s biggest. With a garden hosepipe and plastic funnels, they carefully decant the petrol, breathing in the fumes since they don’t have masks. The copper liquid flows slowly from drums into glass jars or drinks bottles.

Achille left school after his baccalaureate. Marcel is still at school, and helps out after he’s done his homework. Their mother is bringing up four children alone. “We have to help our family, and it’s no use having qualifications,” says Achille. “You can’t get a job here unless you’ve got connections.”

They sell 1,000-1,500 litres a week, making US$165-220 profit a month — far more than the US$65 minimum monthly salary for civil servants. Like the estimated 200,000 other kpayo sellers they are prepared to accept the risks.

There is significant price fluctuation. Kpayo prices almost doubled between May and August 2015, reaching 650 CFA francs (US$1.1), after a price rise in Nigeria because of its government’s heavy debts to oil companies and uncertainties over the presidential election at the end of March 2015. Kpayo was no longer competitive with legal petrol, imported by several operators and sold at filling stations.

The trade in smuggled fuel continued, though the sellers made no money. But the black market is so big that the official networks, not as developed as those in Togo, Ghana or Côte d’Ivoire, have only 350 filling stations in total. The African Development Bank estimates nearly 80 per cent of all fuel consumed in Benin is contraband. In September, kpayo fell to just over US$0.50 a litre, 30-40 per cent less than at official filling stations.

Nigeria, now challenging South Africa as Africa’s economic powerhouse, is the world’s 11th largest oil producer. In 2012, its government tried but failed to reduce fuel subsidies: Nigeria is 152nd out of 187 in the UN Development Programme’s human development index, and its people are still among the world’s poorest.

Petrol shortages occur when oil companies hold back their stock to pressure the authorities, as happened in May, with an immediate impact on the price of kpayo in Benin.

The traffic in contraband fuel is worth more than US$130 million a year and deprives Benin of at least US$32 million in tax revenues. Apart from kpayo, Benin’s economy depends on cotton and agriculture (36 per cent of GDP), and on commerce (18 per cent) and haulage (11 per cent), both heavily Nigeria-orientated. The port of Cotonou is a secondary point of access to the sea for Lagos, only 120 km away.

Kpayo sellers also risk deadly fire: On 31 October part of Dantokpa Market burned down after a high-speed police chase of a truck carrying kpayo. Roadside stalls can catch fire if a driver tries to fill up without turning off his engine; a single drop of petrol falling on a spark plug is enough.

“Our doctors have to treat many emergency cases — terrible injuries, third-degree burns — with few resources,” says former health minister Kessile Sare Tchala.

 

“The business is impossible to reform”

The sellers — some teens or women with a baby on their back — serve customers all night. Most are motorcyclists, with up to five passengers. There is no public transport, so two-wheelers are Benin’s cheapest transport, and Cotonou has 150,000 zemidjans or motorcycle taxis. These are part of the informal economy, which is the main source of employment.

As everywhere in West Africa, unemployment is high amongst the young — 60 per cent for those age 25-34.

Strong population growth means more people joining the jobs market every year, so the young flee the countryside, where nearly 40 per cent live below the poverty threshold, compared with 31 per cent in urban areas.

Cotonou’s population has quadrupled in 30 years, and the city is now home to 16 per cent of Benin’s population crammed into barely 0.7 per cent of its land area. “The population movement is like breathing,” says Nicéphore Soglo, mayor of Cotonou and former president.

“Cotonou has a population of a million at night, and two or three times that in the daytime, when people come from as far away as Nigeria to do business. In the evening, the city empties as people go home to dormitory towns, or even to Porto-Novo and Ouidah, which are 43 km and 38 km away.”

From 11am to 3 pm in Cotonou is “go-slow” time, a term originally used for traffic jams in Lagos. There have been efforts to organise the zemidjans, even a programme financed by the French Development Agency (AFD) to get the motorcycles replaced with less polluting models. But the scheme provided no credit or finance for drivers without the money to buy a new motorcycle.

Soglo admits there isn’t much the authorities can do about kpayo: “Nigeria being so close makes it difficult to control informal trade. In the absence of a regional policy, we don’t have a viable solution.”

 

“Taxes” in the pocket

Kpayo wholesalers include well-known businessmen and politicians with the financial muscle to buy and stock large volumes, which they then distribute to the roadside sellers, adding a margin. At some points on the border, customs officials monitor the traffic and levy a modest “tax” of US$0.15 per 50-litre drum, which they pocket. (The tax on legal petrol is 25 per cent.)

Though Benin wants to be seen as exemplary, every attempt to ban kpayo has been embarrassingly defeated. As the former “Latin Quarter of Africa”, Benin was Africa’s first country to hold free elections, in 1990, since when there have been regular changes of government.

But the democratic façade hides a weak state, unable to reform the fuel trade. In 2013 there were riots in Seme-Kpodji after police confiscated stocks. Kpayo sellers beat up a policeman’s wife, then kidnapped the officer himself and clashed with the army, which had to call in reinforcements to clear the barricades. President Thomas Boni Yayi’s government had to give up the fight, and continues to tolerate large-scale smuggling.

Kpayo is a clear indication of how the country works,” says political analyst Gilles Olakounle Yabi, founder of the West African Think Tank (Wathi), based in Dakar. “It illustrates Benin’s links with Nigeria, the importance of the informal sector in the economy, and the difficulties of government in a democratic system.” In Togo, the secretive military dictatorship managed to ban the traffic. In Benin, the government has neither the resources nor the authority.

Yabi says: “Who wants to get on the wrong side of the thousands of people who depend on it directly? The real problem, in my view, is that the democratic system is limited to holding elections. Apart from that, it is totally perverse and there is no sense of what is in the general interest.”

The traffic persists because everyone benefits from it. The informal sector is also a safety valve. To challenge the black market would probably threaten political and social stability in Benin, which, like many African countries, is aware of the gap between its geo-economic limitations and the good governance enjoined by international financial institutions.

Amongst the underlying causes of this parallel economy is a particular attitude to society. “Many people feel it’s OK to get rich any way you can,” says one businessman. In the last few years, scandals have hit Benin’s newspapers, the latest concerning the misappropriation of nearly US$4.3 million in Dutch aid to the water sector.

Corruption is endemic and many of the most urgent projects never happen. Everyone wants to take their “commission” before starting work. Cotonou’s new international airport, announced 10 years ago, has yet to be built despite the dangers of the current airport, in the middle of the city. The Peach Road, along the coast, has not been paved, and construction of a bridge that would relieve traffic congestion in Porto-Novo has not started.

Yabi criticises the persistence of “kpayo democracy” — ersatz democracy, where the lack of clear separation between public undertakings and the informal economy means that agents of the state find it difficult to separate their official role from the pursuit of personal gain. This is present at all levels of society, and encourages people to bypass the rules for quick rewards. The state no longer has any authority in such a culture of impunity.

President Boni Yayi’s nomination of Lionel Zinsou – a Franco-Beninese former merchant banker with a reputation as a man of action – as prime minister in June appealed to Benin’s urban youth, who see him as capable of offering more than motorcycles and kpayo. But he has little room for manoeuvre, and for the moment Benin has to go on running on kpayo.

 

This article was originally published in French in Le Monde diplomatique. Copyright © 2016 Le Monde diplomatique. Republished here by permission of Agence Global.

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