Benin’s Booming Illicit Fuel Trade Calls for New Responses

The illicit fuel trade in Benin has soared since 1980, and the situation isn’t much better today, reports David Zounmenou for ISS Today.

Illicit fuel covers 80% of national demand. Smugglers buy the fuel in neighbouring Nigeria, where government subsidies make it cheaper, and traffic it into Benin on motorbikes using unofficial roads.

Even closing the border between the two countries didn’t affect the networks. Many unofficial and poorly monitored entry points from Nigeria to Benin remained active.

Benin’s government has undertaken some initiatives with varying degrees of success. A new law passed in 2018 banned the illicit fuel trade and related activities, including sales outside the official trading and distribution network.

In addition, since 2017, private groups such as Jehovah Nissi Petroleum have helped establish and expand official petrol stations in major cities. These entities are trying to fill the gap in the official distribution network.

Illicit traders active in Benin’s formal sectors told ISS Today that the emergence of private entities meant that many urban users were again using official petrol stations. They said these alternatives, combined with better law enforcement, could eventually force informal dealers to join formal fuel distribution structures.

This change could encourage citizens to rely less on the illicit fuel trade, they said. Most, however, believed the illegal trade still held a substantial part of the market and didn’t feel their activities were threatened.

The illicit fuel trade is estimated to generate 105 billion FCFA (€160 million) annually, and these gains aren’t reported to tax authorities.

The government is therefore urged to look beyond sporadic efforts to address the problem, by implementing sustainable, multi-dimensional responses that deal with structural drivers. It remains to be seen whether such responses will include the introduction of fuel marking in Benin.