Benin has turned a corner. With economic growth reaching 8.1% in 2025 and a solid outlook ahead, the country is no longer just talking about sustainable financing—it is scaling it up. To fund the next phase of its transformation, Benin must mobilise far more capital. The tools are already in motion: SDG bonds, green finance, climate finance, and blended finance. This is the moment when scattered experiments become a coherent system.

A transforming economy needs capital that flows for years, not months. According to the African Development Bank, Benin will need to mobilise roughly $2.43 billion annually through 2030 to accelerate its structural transformation. Roads, energy, factories, agricultural enterprises, digital services, and water infrastructure all demand heavy 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 all have a role to play. The real question is how to channel these different resources toward the projects that matter most for Benin’s economy.

Benin has already begun to answer that question. In recent years, the country has tested several forms of sustainable financing. It has also launched reforms aimed at steering capital toward development and climate-related investments.

How Benin started diversifying its funding sources

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

In June 2023, Benin continued this approach by mobilising €350 million from Deutsche Bank to finance SDG-sensitive spending. These operations demonstrate that it is possible to link a portion of market-raised financing directly to precise development objectives.

The country then broadened its approach to green finance. In September 2025, the government launched its Green Finance Framework. This framework identifies projects eligible for green financing. Renewable energy, clean transport, water management, biodiversity, energy efficiency, and climate change adaptation are among the sectors covered.

Another workstream concerns the climate taxonomy. The term may sound complicated, but the idea is simple: define criteria to determine which economic activities can be considered favourable to the climate transition.

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

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

Making room for private capital

The next question is private investment. Benin’s needs are substantial, and public resources alone cannot cover all necessary projects. But attracting a private investor is not always straightforward. Some projects are valuable 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 first 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 is intended to help mobilise financing for the private sector and support investments linked 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 encourage 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.

Turning climate finance into 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 against climate risks.

The government has taken several actions in this area. In July 2024, it organised a roundtable in Cotonou with the World Bank and the IMF dedicated to climate finance. This process subsequently 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 mobilise more public and private financing for the country’s climate priorities. Among the tools under consideration are green bonds, blended finance, and mechanisms under Article 6 of the Paris Agreement. The OPEC Fund has announced a commitment of €30 million 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 more than 100,000 rice, cotton, and livestock producers. The scheme is to be gradually extended to other productions 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 faced by producers.

Benin now has several tools at its disposal. SDG bonds link financing to development objectives. Green finance helps direct resources toward environmental projects. The climate taxonomy gives investors benchmarks. Blended finance seeks to attract more private capital. Climate finance 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 suits each project, how to share risks, and how to ensure that the resources mobilised deliver the expected results.

Benin has already embarked on this evolution. The next stage will be scaling up. Ensuring that the 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 mobilises and directs capital in the coming years will help determine the ability of this growth to generate more value, reduce extreme poverty—one of the government’s priorities—and accelerate sustainable development.

Tayon Ulrich LAVINON

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