The Causes of Low Financing Rates for Agriculture in Benin

Since the early 1990s, the financial sector has been liberalized, following the example of other sectors of the Beninese economy. Despite the large number of microfinance institutions that have emerged, financial services for agriculture are provided by only a small number of MFIs. This study therefore set out to identify the factors underlying the low contribution of microfinance institutions to the financing of the agricultural sector in Benin. This analysis led to proposals aimed at improving the contribution of MFIs to agricultural financing. The results show that the risk-mitigation strategies implemented by MFIs explain their limited contribution to agricultural financing. Furthermore, the highly selective nature of the conditions for accessing MFIs' financial services is the reason for the low level of their use by agricultural producers. Finally, the lack of long-term financial resources at the MFI level leads to a mismatch between the services they offer and financing needs.