The Nigerian border closure

Benin shares the CFA franc with seven other West African countries, issued by the Central Bank of West African States (BCEAO), so its exchange rate is pegged to the euro and its interest rates are set regionally. The economy depends on trade with its much larger neighbour Nigeria, including re-exports of imported goods through the port of Cotonou. When Nigeria closed its land borders from August 2019 to December 2020 to curb smuggling, trade through Benin was disrupted and the Beninese economy lost a major source of income, though cotton and the port helped limit the damage, and economic growth stayed positive. The episode shows how regional integration, and the lack of an independent monetary policy, leaves small members of the franc zone exposed to the decisions of their neighbours rather than to the central bank's actions.