World Bank approves €635.5M package to boost Benin’s growth

Banking & Financial Services
Webp cxr4of4xxy3nf6q2trtuw7c2lxgd
Ajay Banga, 14th president of the World Bank | World Bank website

The World Bank has approved a €635.5 million financing package through the International Development Association (IDA) to support Benin's efforts in strengthening private sector-led growth, boosting domestic revenue collection, and enhancing social and climate resilience. This package comprises a €135.5 million Development Policy Financing credit and a €200 million Policy-Based Guarantee aimed at mobilizing €500 million in long-term commercial financing.

The initiative is structured around three main pillars. The first pillar focuses on operationalizing a new Private-Public Partnership (PPP) framework to encourage private sector participation in public projects. This will involve improving access to finance for small and medium enterprises, providing loan guarantees from banks and microfinance institutions, and offering capitalization, advice, and other forms of assistance.

The second pillar involves reforms to increase domestic revenue collection, thereby creating fiscal space for public investment and ensuring debt sustainability. The third pillar aims at reforms to bolster social and climate resilience by expanding the Single Social Registry, enhancing the disaster risk management system, and implementing regulations for sustainable cities.

Nestor Coffi, World Bank Country Manager for Benin, commented on the initiative: “Benin has embarked on the structural transformation of its economy, which has had a positive impact on growth in recent years. To make this growth more inclusive and resilient, the private sector will need to increase its participation in key economic sectors. The reforms underway regarding public-private partnerships will make the country more attractive for business and support climate financing.” He further added that this financing would aid in protecting vulnerable populations, strengthening the social contract, facilitating service access, and building resilience against climate shocks.

This operation aligns with Benin's climate change commitments under the Paris Agreement by promoting green development through enhanced adaptation to climate change. It builds upon prior achievements facilitated by an earlier $230 million operation that advanced reforms to improve Benin's capacity in managing disaster risks and increasing resilience against natural disasters' socioeconomic impacts.

The IDA plays a crucial role as part of the World Bank Group in aiding some of the world's poorest countries by providing grants and low- or no-cost loans for projects that stimulate economic growth and reduce poverty.