UNDP Microfinance Assessment Report: Benin

Publication Date: Sep 1997
Published by: Special Unit for Microfinance (SUM)
Document Type: Paper

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What is the present and future of microfinance in Benin?

UNDP microfinance assessment reports take a full perspective of national economy, politics, culture and the climate for microfinance. Their contents are structured around 9 common components of which three are microfinance specific. The components are:

• Finance and banking in Benin have been hit by bad loans and crises. By the end of 1987, nearly 75% of the portfolio of the national banks was irrecoverable. After the liquidation of state owned banks, the financial sector in Benin underwent fundamental restructuring. By the mid 1990s, the financial sector consisted of the central bank, five private commercial banks, a national savings bank, a postal checking centre, three life insurance companies, leasing companies, the rural savings and loan co-operative network (FECECAM), non-bank financial institutions and an active informal sector
• Interventions in the microfinance sector have been high profile with large institutions supporting FECECAM. Local institutions: 27 non-governmental organisations--active in areas besides microfinance,6 mutualist organizations,2 co-operatives (2),2 mutualist-co-operatives--which have characteristics of both and a single independent microfinance institutions
• Potential and demand for Microfinance The new and important feature of microfinance in Benin is the emergence of the Consortium Alafia created to provide a framework for reflection, exchange, and harmonisation of MFI members' activities in Benin and Togo. The goal of the Consortium is to improve the capacity of microfinance institutions to offer better services to the target population. Experiences of MFIs in Benin indicate that roughly 10% of commercial sector loans are for artisanal activities, 2% for transformation of products, and the rest for petty trade and services. It is estimated that only about 10% of the demand for microfinance is currently being met