Benin introduces mini fuel stations as a window opens to tackle illicit fuel supply chains and armed groups.

Timing is a key element determining the success, or otherwise, of stabilization interventions. A series of recent developments shaping the informal fuel market in northern Benin – primarily the lifting of the 50-year fuel subsidy in Nigeria in May 2023 and a deadly fire at an informal fuel station in Benin in September 2023 – have spurred political will and created a significant window of opportunity to disrupt the informal trade.

This presents a significant stabilization opportunity, given that northern Benin’s informal fuel economy operates as a critical supply chain for non-state armed groups operating there and in the Sahel, most prominently Jama’at Nasr al-Islam wal Muslimin (JNIM), and to a lesser extent the Islamic State Sahel Province (IS Sahel). Interventions drawing informal traders into the formal sector would not only shrink the informal market – raising government revenues – but could help erode connections between fuel traders and non-state armed groups, who are key consumers and whose protection is often required to smuggle fuel northwards into the Sahel.

The dispersed nature of the fuel trade, and the fact that not all informal fuel traders would leave the trade, means that non-state armed groups would no doubt retain supply sources. However, increasing the friction inherent in this illicit supply chain, and disrupting the ease with which non-state armed groups currently meet their fuel needs through northern Benin’s informal fuel market, could place a greater burden – financial and logistical – on their operations. Informal fuel traders are exposed to forging relationships with their non-state armed group customers. These are vulnerabilities that would be somewhat mitigated, albeit not removed, through formal employment. Myriad small steps taken to raise the operational cost for non-state armed groups, and weakening their abilities to recruit combatants and service providers, must be part of a holistic response to their growing threat.

Tracing the development of this window in northern Benin is not only helpful in identifying opportunities for local improvement, but for exploring how distinct typologies of crime-sensitive stabilization interventions can be designed and what kind of monitoring can ensure stakeholders are well positioned to act.

Northern Benin’s informal fuel economy and its links to instability

Benin’s informal fuel economy has long met the vast majority of demand across the country. Estimates suggest that illicit fuel accounts for approximately 80% of the fuel market in Benin.¹

This is particularly the case in areas far from urban hubs, including much of northern Benin, where access to formal fuel providers has been a longstanding challenge. The informal fuel trade thus underpins a significant proportion of local mobility and enjoys significant legitimacy among communities: ‘We are not criminals but economic operators,’ said the head of an informal fuel retailers’ association in the town of Materi, on the border with Burkina Faso.²

Figure 1 Illicit hubs in northern Benin.

Source: Illicit Hub Mapping initiative, GI-TOC, https://wea.globalinitiative.net/illicit-hub-mapping

Northern Benin lies on an established major fuel trafficking corridor connecting Nigeria, where fuel could historically be purchased far more cheaply from pumps than in neighbouring countries, and the Sahel. Fuel is trafficked in smaller quantities by motorbikes, and in larger volumes in 4x4 trucks, using a complex network of formal and informal roads, including through the W-Arly-Pendjari (WAP) national parks complex.³

Although northern Benin’s role as a major fuel smuggling corridor has long roots, concerns around the trade have risen since Sahelian non-state armed groups started operating in the area in 2019 and it became clear that the informal fuel trade was a central supply chain for these groups to resource their operations. The modus operandi of such groups – relying on motorbikes and 4x4s for mobility – is underpinned by fuel, making it a central operational resource. The spike in demand since violent extremist organisations (VEOs) became major purchasers around 2020 led to increased black-market prices, enhancing the profitability of fuel smuggling.

Non-state armed groups, and particularly JNIM, the most active in the area, are not only important consumers of smuggled fuel; in some cases, they have provided protection to smugglers in return for rents. There is no single discernible taxation system between armed groups and fuel traffickers; rather, the formality of taxation appears to vary between time and place.

However, as of October 2023, this protection system appears to underpin successful trading on some routes between Benin and Burkina Faso: ‘If you don’t have a relationship with the people in the bush [local terminology for violent extremist groups], that’s it for the eastern region, you can no longer trade peacefully,’ reported a Natitingou-based fuel wholesaler. ‘They’re the ones who decide whether the fuel gets through.’⁴

Responses to the informal fuel trade and their impacts

The national government has adopted a range of approaches – aimed at tackling both supply and demand – in trying to address the fuel smuggling economy.⁵ These have escalated significantly with growing awareness of the role of the fuel trade in resourcing JNIM and IS Sahel.

In seeking to disrupt supply, military interventions have had a measure of success while at the same time contributing to increased prices for local communities who also rely on the trade in informal fuel. Illustratively, the disputed Koualou/Kourou area on the Benin–Burkina Faso border, which remains the subject of an open sovereignty dispute and has long operated as a significant fuel stockage and redistribution point, was significantly impacted by two supply side interventions from September 2021. Firstly, operations by the Benin military, triggered by heightened concerns about Koualou/Kourou operating as a significant resourcing node for non-state armed groups. Secondly, the dismantlement of a major fuel smuggling network operating through the area, which led to successful convictions in Burkinabe courts.⁶

Recognizing the changing role of Koualou/Kourou, the Materi retailers’ chief, observed: ‘Before, [when] many of us were based in Koualou, there were wholesalers and smaller retailers. Everything was done there. Since the jihadists came, the Beninese army has asked us to leave. Then they decreed that people coming to Benin for supplies were only allowed half a tank of petrol,’ he said, explaining that this was driven by a perception that those who bought more were selling it to members of the VEOs.⁷ While some fuel smuggling is believed to continue through the area, operations through Koualou/Kourou appear to have significantly diminished.

The government has also tried various measures to regulate the trade. Having struggled to enforce trading standards, in 2021 it introduced a flat-rate tax on smuggled petroleum products (5 000 CFA Francs [FCFA] per 25 litre can, approximately €7.60), in an effort to deter the practice.⁸ However, this was absorbed as part of the cost of doing business, and further legitimized the trade.⁹

Seeking to also address challenges in accessing licit fuel – a key driver of demand for informal fuel – the government also supported the building of new formal fuel stations, including by providing tax cuts for the construction process. These measures have had some impact, but demand continues to outstrip formal supply, noted Beidi: ‘I’ve been in this business for at least 20 years. Before we were everywhere, there were only the state stations and us… then since [President Patrice] Talon came, we started to see one, two, three stations being built in towns like Natitingou, but here in Materi [commune], apart from the one in Porga, you won’t find another station. We’re the only fuel sellers in the town.’¹⁰

The measures above have been complemented by awareness-raising campaigns highlighting the risks of the informal fuel trade, as well as programming seeking to divert operators into other livelihoods, noted Beidi. For example: ‘Here in Materi, we have two salespeople who have received loans to open shops and leave petrol on the sidelines.’ However, not all sellers are open to this idea: ‘Some of us have been doing this all our lives. We don’t know how to do anything else.’¹¹

While a laudably multi-faceted set of responses, impacts have been limited, with supply-side disruptions dependent on an ongoing military and law enforcement presence and resources, and demand-side interventions struggling to operate at the required scale.

Windows of opportunity?

Recent developments domestically and in neighbouring Nigeria have presented an arguably unique window of opportunity. On 29 May 2023, Nigerian President Bola Tinubu, within his first 100 days in office, lifted the subsidy on petroleum products, bringing to an end a 50-year era of national subsidized fuel.¹² The impacts were immediate, with prices in Nigeria tripling overnight.¹³

Figure 2 Fuel prices in Nigeria, 2019–2024.

Source: Petroleum Products Pricings Regulatory Agency, Nigeria

A few months later, on 23 September, a fire at an informal fuel warehouse in Sèmè-Kraké, at Benin’s border with Nigeria, claimed 35 lives – a tragedy unfortunately common among poorly regulated informal stockage facilities – heightening pressure on the government to act.¹⁴

The burned-out remains of an informal fuel warehouse in Sèmè-Kraké, following a fire that claimed 35 lives, September 2023.

Photo: Yanick Folly/AFP via Getty Images

Informal fuel sellers in northern Benin cited the lifting of the subsidy as a key factor disrupting their trade, and the fire as a key trigger for government action. A wholesaler in Natitingou noted: ‘Our margins have not increased, but the price in Nigeria has; their new president has killed the market. Since the price has gone up in Nigeria, since the customs officers have started to block the border, it has become difficult for us to sell, our prices have gone up, and people don’t have the money.’¹⁵ Another fuel trader added: ‘Since the fire, they’ve announced their plans for mini stations all over the country… everything has accelerated since the fire.’¹⁶

By October 2023, the price of illicit fuel in some areas of northern Benin – particularly in the Atacora department – had almost doubled compared to the previous year, reaching circa FCFA 750-800 per litre (approximately €1.20), making it more expensive than licit fuel (retailing at FCFA 680 – €1.02 – throughout the country). This is unprecedented in Benin and offers a unique window of opportunity for intervention in the fuel trade.

In October 2023, the government announced a programme to build 5 000 mini stations across the country. The project encourages informal fuel sellers to pool their resources to purchase such mini stations, and to employ other informal fuel sellers to run them.¹⁷ This previously unattractive proposition has become much more viable since the formal sector began to undercut the informal sector so drastically in some areas.

Some fuel traders in northern Benin are already planning to benefit from the scheme: ‘We’re going to buy one of the mini stations when they become available. Because our work is of public utility, we are essential to the people – without us no one would move ­– so we must adapt and continue the work for the people.’¹⁸

The way the scheme is designed to generate jobs is pivotal; the fuel-smuggling economy provides employment to around 40 000 people in Benin, often in areas where alternatives are scarce.¹⁹ The head of Materi’s fuel retailers’ association, echoing concerns across the sector, noted that the government messaging has been that kpayo, the informal fuel trade, ‘is going to disappear and that they’re going to help us find other jobs. But who’s going to find work for all these people?’²⁰

In northern Benin, the security implications of pushing individuals out of the informal fuel trade without viable alternatives are significant. In the words of one wholesaler: ‘Our young people with no education and no work, those looking for easy money, what do they do? Where do they go? The brave ones go off to Nigeria to work in the fields, the others join the Islamists.’²¹

Individuals involved in illicit economies are often vulnerable to engagement with non-state armed groups, either as suppliers, or ultimately through recruitment. In northern Benin, individuals poaching in the WAP complex, and those involved in the fuel trade, have been targeted by JNIM.²²

Looking ahead

The success of stabilization interventions is determined as much by timing, as by the shape of the intervention. Entry points for intervention, and for disrupting the links between illicit economies and instability, can open for only short windows of time. We are currently seeing in northern Benin an unprecedented combination of factors that creates a significant window of opportunity, but also a serious risk.

If appropriate action is taken – as the Benin government appears to be giving some indications of doing – success can be achieved, both in terms of enhancing formal employment and state revenues. However, if alternatives are not available, and informal fuel traders see profits slump, they may become more reliant on higher prices offered by non-state armed groups who face more obstacles in accessing formal supply chains, or simply engage in other, more harmful, illicit activities.

In order to drive towards more desirable outcomes, the government should concentrate the mini fuel stations in the north of the country, where the fuel trade is most intimately linked with security dynamics, and accelerate implementation. This is a key moment to enhance access to formal fuel and ensure those in the informal trade have alternative sources of employment.

As one fuel wholesaler noted: ‘People need us and will always need us, because in many places we’re the only ones who supply them with the petrol they need to get around. So, for as long as each commune, each village does not have a petrol station, we will still be there.’²³

Notes