With economic growth reaching 8.1% in 2025 and a strong outlook ahead, Benin is pushing forward with its economic transformation. To fund the next phase of development, the country needs to mobilize more capital. Several solutions are already in motion, including SDG bonds, green finance, climate finance, and blended finance.

A transforming economy requires capital over many years. According to the African Development Bank, Benin will need to raise about $2.43 billion annually until 2030 to accelerate structural transformation. Roads, energy, factories, agricultural enterprises, digital services, and water infrastructure all demand significant investment. Not all of them can be financed the same way.

Public funds remain essential, but they cannot cover everything. Banks, private investors, financial markets, and development partners also have a role to play. The challenge is how to channel these different resources into projects that matter for Benin’s economy.

Benin has already started answering this question. In recent years, the country has tested various forms of sustainable financing. It has also launched reforms to better direct capital toward development and climate-related investments.

Benin has already begun diversifying its financing sources

The first signal came in 2021. Benin issued €500 million in SDG bonds. This operation had a special feature. The funds raised were exclusively for expenditures contributing to the Sustainable Development Goals. In July 2021, Benin became the first African state to carry out an international SDG Eurobond issuance.

In June 2023, Benin continued this approach with a €350 million mobilization from Deutsche Bank to finance expenditures highly sensitive to the SDGs. These operations show that it is possible to directly link a portion of market-raised financing to specific development goals.

The country then expanded its approach to green financing. In September 2025, the government launched its Green Financing Framework. This framework helps identify projects eligible for green funding. Renewable energy, clean transport, water management, biodiversity, energy efficiency, and climate change adaptation are among the sectors involved.

Another project concerns the climate taxonomy. The term may sound complicated, but the idea is simple. It involves defining criteria to determine which economic activities can be considered favorable to the climate transition.

The IMF indicates that Benin has finalized the structure, method, and governance rules of this taxonomy. Criteria have already been defined for several sectors, including energy, agriculture, waste, and forests. Two decrees formalized this work in January 2026.

These various projects show that sustainable financing is no longer a new idea for Benin. The country already has several experiences it can build on.

Giving more space to private capital

The next question is private investment. The country’s needs are large and public resources alone cannot cover all necessary projects. But attracting a private investor is not always easy. Some projects are useful for the population and the economy but carry significant risks or take years to become profitable.

This is where blended finance can help. Its principle is to combine public resources or funds from development partners with private capital. These initial resources can help reduce certain risks and make a project more attractive to investors.

Benin is already working in this direction. The African Development Bank, the Climate Investment Funds, and Canada Climate Action are supporting the establishment of the Benin Green Investments Vehicle. This mechanism aims to mobilize financing for the private sector and support investments related to the green transition.

Other actions point the same way. With support from the World Bank, the Global Green Growth Institute, and BOAD, Benin is working on a platform to facilitate access for banks and microfinance institutions to climate financing. The goal is notably to promote long-term investments by small and medium-sized enterprises.

This issue is crucial. A company that wants to install solar equipment, reduce its energy consumption, or adapt its activities to climate effects must be able to access suitable resources. Sustainable finance should not remain limited to large operations on international markets. It must also reach the businesses that produce, invest, and create jobs in Benin.

Making climate finance a development lever

Climate change adds another dimension to financing needs. Benin must continue investing in its economy while protecting its infrastructure, agriculture, water resources, and activities from climate risks.

The government has taken several actions in this area. In July 2024, it organized a roundtable in Cotonou with the World Bank and the IMF dedicated to climate finance. This led to a cooperation framework bringing together the government, the World Bank, the AfDB, the Asian Infrastructure Investment Bank, and the OPEC Fund.

The goal is to better coordinate reforms and mobilize more public and private financing for the country’s climate priorities. Tools under consideration include green bonds, blended finance, and mechanisms under Article 6 of the Paris Agreement. The OPEC Fund has announced a €30 million commitment in this context.

Climate finance concerns very concrete sectors. It can be used to develop renewable energy, strengthen water management, improve agricultural resilience, or support companies seeking to reduce their energy consumption.

The government has also made progress on managing climate risks in agriculture. According to the IMF, a national agricultural insurance scheme was established after a pilot phase that benefited over 100,000 rice, cotton, and livestock producers. The scheme is to be gradually extended to other productions and to about 200,000 farmers. These examples show that climate finance can go well beyond large infrastructure projects. It can also help protect incomes, support businesses, and reduce the risks faced by producers.

Benin now has several tools at its disposal. SDG bonds link financing to development goals. Green finance helps direct resources to environmental projects. The climate taxonomy gives investors benchmarks. Blended finance seeks to attract more private capital. Climate financing mechanisms can help address risks related to climate change.

The next step will be to make these tools work better together and, above all, to use them to finance more projects. That is where much of the debate lies. The issue is no longer just finding funds. It is also about knowing which financing suits each project, how to share risks, and how to ensure that mobilized resources produce the expected results.

Benin has already begun this evolution. The next stage will be scaling up. Ensuring that new sustainable finance tools are not limited to a few operations but contribute more to financing businesses, infrastructure, employment, and the ecological transition.

Growth creates momentum. How the country mobilizes and directs capital in the coming years will help determine the ability of this growth to produce more value, reduce extreme poverty—one of the government’s priorities—and accelerate sustainable development.

Tayon Ulrich LAVINON

Agro-economist and consultant in sustainable development, communication for development, knowledge management, and partnerships.