Use of a warrantage system to face rural poverty and hunger in the semi-arid area of Burkina Faso

Ouattara, Badiori; Taonda, Sibiri Jean Baptiste; Traoré, Arahama; Serme, Idriss; Lompo, FranÃ§ois; Peak, Derek; Sédogo, Michel Papaoba; Bationo, A.

doi:10.5897/jdae2017.0841

Cited by 3 publications

(4 citation statements)

References 14 publications

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“…Besides, FECECAM tailored its loan products to the need of its client. For example, the lender offers among its farm loan products, the warrantage and an inventory credit system that remains the main source of funds for agricultural activities in Sub-Saharan countries like Burkina Faso (Ouattara et al, 2018). Studies showed that the warrantage, a community-based microcredit scheme, is suitable and affordable to poor small-scale farmers (Ouattara et al, 2018;Tabo et al, 2011).…”

Section: Impact Of Agricultural Loansmentioning

confidence: 99%

“…For example, the lender offers among its farm loan products, the warrantage and an inventory credit system that remains the main source of funds for agricultural activities in Sub-Saharan countries like Burkina Faso (Ouattara et al, 2018). Studies showed that the warrantage, a community-based microcredit scheme, is suitable and affordable to poor small-scale farmers (Ouattara et al, 2018;Tabo et al, 2011). A study by Ouattara et al (2018) showed that the warrantage system's use improved farmers' profit by 140%, resulting in higher income, ultimately improving farmers' livelihood.…”

Section: Impact Of Agricultural Loansmentioning

confidence: 99%

“…Studies showed that the warrantage, a community-based microcredit scheme, is suitable and affordable to poor small-scale farmers (Ouattara et al, 2018;Tabo et al, 2011). A study by Ouattara et al (2018) showed that the warrantage system's use improved farmers' profit by 140%, resulting in higher income, ultimately improving farmers' livelihood.…”

Section: Impact Of Agricultural Loansmentioning

confidence: 99%

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Does experience with agricultural loans improve farmers' well-being? Evidence from Benin

Sagbo

Kusunose

2020

AFR

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PurposeThe purpose of this study is to examine the effect of loans provided by Benin's largest microlender.Design/methodology/approachA pipeline design and matching techniques contribute for identifying the causal effect. The loan treatment considered is loan experience. It includes program entry timing, take-up frequency and the amount obtained over six years. The study uses a cluster analysis to create comparison groups.FindingsExperience with agricultural loans has a statistically significantly positive effect on recipients' farm income, food security and women's empowerment. Though unusual, these positive results can be credited to the very low rate of loan repurposing and mostly to the lender's rigorous loan implementation strategy.Practical implicationsThe study results validate the hypothesis underlying development strategies that target women regarding loan programs. The study provides a simple yet valuable lesson for future credit impact evaluations: the context of the loan program as well as the evaluation indicators is essential.Social implicationsThis study’s findings suggest that microcredit, when offered judiciously and with support, can improve farmers' conditions.Originality/valueGiven the relatively long period studied, the analysis has been innovative in defining loan treatment and creating reliable treatment groups. Also to the best of the authors’ knowledge, this study is the first of its kind in Benin.

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Section: Impact Of Agricultural Loansmentioning

confidence: 99%

Section: Impact Of Agricultural Loansmentioning

confidence: 99%

Section: Impact Of Agricultural Loansmentioning

confidence: 99%

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Does experience with agricultural loans improve farmers' well-being? Evidence from Benin

Sagbo

Kusunose

2020

AFR

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“…Agricultural sector in the Benin Republic actors since its essence is to create a conducive environment; thanks to the horizontal and vertical in-between links it builds among actors of MSP that brings together value chain core actors, non-financial service providers and partakers of financial sector who, through their knowledge of a chain's specific risks, design a tailor-made credit scheme. Promoted by FAO (Ouattara et al, 2018), this approach has gradually been experienced in the Republic of Benin for more than a decade. Yet, to the best of our knowledge, very little is known about key drivers of access to formal credit as well as the amount received in that context of VCFS.…”

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confidence: 99%

Lenders and borrowers’ collaboration-based risk mitigation credit market

Flifli

Okuneye

Akerele

2019

AFR

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Purpose The purpose of this paper is to study an innovative rice value chain financing system (VCFS) established in Benin, to identify the determinants of producers and processors access to formal credit, both at intensive and extensive margins. It focuses on multi-stakeholder platforms (MSP) which connect producers and processors in need of credit to potential financial lenders. Design/methodology/approach The empirical analysis uses rich cross-sectional survey data collected in Northern Benin in 2018. The sample consists of 215 rice producers and 217 rice processors randomly selected through a multi-stage sampling and interviewed with structured questionnaires. The empirical models analyze the determinants of the likelihood to receive a credit and the amount of credit received. To account for the sample selection and censored nature of the main outcome variable, the study considers a Heckman two-stage model coupled with a Tobit model for robustness checks. Findings The study finds that the MSP are effective in increasing access to formal credit and the amount borrowed. Producers and processors who are members of the MSP are more likely to receive credit and, conditional on being approved for credit borrower, a larger amount. Other key factors that significantly explain access to credit include the use of soft guarantee for securing a loan, the degree of participation in the platform and demographic characteristics. These findings are consistent across the Heckman and Tobit models. Research limitations/implications The study attempts to rigorously analyze the factors explaining producers and processors access to credit using cross-sectional survey data. But it has some limitations. The main limitation is the type of data used. Ideally, one would like to run a randomized control trial (RCT) to randomly assign participation in the MSP to causally estimate its impact of access to credit. The second-best option would be to have a panel data covering the period before and after the establishment of the platform. However, in the absence of an RCT or panel data, the study resorts to cross-sectional data and empirical models that account for sample selection bias and the censored nature of the credit received. Practical implications One of the key findings of the study is that participation in the MSP (through different value chain stages associations) increases access to formal credit. This highlights an important and effective mechanism, a well-coordinated value chains that integrated lenders, that policymakers can leverage to facilitate access to credit in the agricultural sector. Social implications Access to credit is important to boost agricultural productivity and income. Hence, the findings of the study have social implications in terms of poverty reduction in rural areas. Originality/value The study contributes to earlier theories and empirical studies on the demand for credit. It focuses on an innovative VCFS, increasingly adopted in many developing countries, adds originality and value to the understanding of mechanisms to unlock agricultural actors’ access to credit in low-income countries.

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