A financing gap of $2.43 billion a year
Benin’s economy grew 8.1% in 2025, and the outlook remains strong. But sustaining that momentum requires something less visible than cranes and factories: capital, and lots of it. According to the African Development Bank, the country needs to mobilize around $2.43 billion every year through 2030 to speed up its structural transformation. Roads, power plants, factories, agribusinesses, digital services and water infrastructure all demand heavy investment — and they cannot all be funded the same way.
Public money remains essential, yet it cannot cover everything. Banks, private investors, financial markets and development partners must step in too. The real question is how to channel these different resources toward the projects that matter most for Benin’s economy.
Benin has already begun answering that question. Over the past few years, the country has tested several forms of sustainable financing and launched reforms aimed at steering capital toward development and climate-related investments.
SDG bonds: a first in Africa
The first signal came in 2021, when Benin issued €500 million in SDG bonds. The proceeds were earmarked exclusively for spending that contributes to the Sustainable Development Goals. With that move in July 2021, Benin became the first African state to carry out an international SDG Eurobond issuance.
In June 2023, the country followed up by raising €350 million from Deutsche Bank to finance spending with strong SDG sensitivity. These operations demonstrate that a portion of market-raised funding can be tied directly to precise development objectives.
Green finance and a climate taxonomy
Benin then widened its approach to green financing. In September 2025, the government launched its Green Financing Framework, which identifies projects eligible for green funding. Renewable energy, clean transport, water management, biodiversity, energy efficiency and climate change adaptation are among the sectors covered.
Another workstream involves the climate taxonomy. The term sounds technical, but the idea is straightforward: defining criteria to determine which economic activities can be considered supportive of the climate transition.
The IMF notes that Benin has finalized the structure, methodology and governance rules of this taxonomy. Criteria have already been set for several sectors, including energy, agriculture, waste and forests. Two decrees formalized the work in January 2026.
Together, these efforts show that sustainable financing is no longer a new idea in Benin. The country already has several experiences it can build on.
Bringing private capital into the mix
The next challenge is private investment. Benin’s needs are large, and public resources alone cannot cover every necessary project. But attracting a private investor is not always easy. Some projects are valuable for the population and the economy yet carry significant risks or take years to become profitable.
This is where blended finance comes in. Its principle is to combine public resources or funding from development partners with private capital. Those first-layer resources can help reduce certain risks and make a project more attractive to investors.
Benin is already moving in this direction. The African Development Bank, the Climate Investment Funds and Canada Climate Action are supporting the creation of the Benin Green Investments Vehicle. This mechanism is expected to help mobilize financing for the private sector and back investments linked to the green transition.
Other actions point the same way. With support from the World Bank, the Global Green Growth Institute and the West African Development Bank (BOAD), Benin is working on a platform to make it easier for banks and microfinance institutions to access climate financing. The goal is notably to encourage long-term investment by small and medium-sized enterprises.
This matters. A company that wants to install solar equipment, cut its energy consumption or adapt its operations to climate effects must be able to access suitable resources. Sustainable finance should not remain confined to large operations on international markets. It must also reach the businesses that produce, invest and create jobs in Benin.
Climate finance as a development lever
Climate change adds another dimension to Benin’s funding needs. The country must keep investing in its economy while protecting its infrastructure, agriculture, water resources and activities against climate risks.
The government has taken several steps in this area. In July 2024, it organized a roundtable on climate financing in Cotonou with the World Bank and the IMF. That process led to a cooperation framework bringing together the government, the World Bank, the AfDB, the Asian Infrastructure Investment Bank and the OPEC Fund.
The aim 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 financing touches very concrete sectors. It can support renewable energy development, strengthen water management, improve agricultural resilience or help companies 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 more than 100,000 rice, cotton and livestock producers. The scheme is to be gradually extended to other crops and to around 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 facing producers.
From tools to scale
Benin now has several instruments at its disposal. SDG bonds link financing to development goals. Green financing directs resources toward environmental projects. The climate taxonomy gives investors reference points. 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 a significant part of the debate lies. The issue is no longer just finding funds. It is also about knowing which financing fits each project, how to share risks and how to ensure that mobilized resources produce the expected results.
Benin has already set this evolution in motion. The next phase is about scaling up: making sure the new sustainable financing tools are not limited to a handful of operations but contribute more broadly to funding businesses, infrastructure, jobs and the ecological transition.
Growth creates momentum. How the country mobilizes and directs capital in the coming years will help determine whether that growth can generate more value, reduce extreme poverty — one of the government’s priorities — and accelerate sustainable development.
