February 7, 2020 – A team of local PEP researchers held a national policy conference to discuss how policies facilitating access to informal as well as formal credit can promote youth entrepreneurship in Benin.
The event attracted 36 attendees, including representatives of the National Microfinance Fund (FNM), National Employment Agency (ANPE), and National Youth Entrepreneurship and Employment Fund (FNPEEJ), as well as national NGOs, academic institutions and the media.
The team presented findings and recommendations from their PEP study that sought to understand youth entrepreneurship in Benin: the role of microcredit uptake and entrepreneur capacity building, selected under the PAGE II initiative in 2018. See PEP Policy Brief 206 for findings and policy implications.
The researchers explained that access to credit, whether from formal or informal sources, plays an important role in the performance of small-scale youth enterprises in Benin. Furthermore, for relatively small (in terms of sales) youth enterprises and start-ups, credit from informal and family sources is more important to their performance than credit from formal sources.
The team highlighted that policies aiming to encourage youth entrepreneurship should include measures to support credit access from informal as well as formal sources. They suggested implementing more flexible regulatory policies for local moneylenders as well as fiscal alleviation policies for those financing family credit.
However, the stakeholders present agreed that encouraging informal credit is risky and likely to lead to money laundering. The discussion led to a new recommendation for policies to encourage microfinance institutions to offer products that are more similar to the credit options available from informal sources.
The research team also emphasized the need for policies to take special account of female-owned businesses when designing credit programs, as women entrepreneurs are often excluded from credit access.
The Director General of the ANPE praised the team for involving policymakers and stakeholders during the research process, and recommended that this practice be adopted more widely. “This will favour the use of research findings to propose relevant policies at national level,” he said.
The research team organized the event with financial and advisory support from PEP. The conference was hosted at the Chaire OMC-CIDI (World Trade Organisation-International Commerce and Inclusive Development Chair) in Cotonou, Benin.