Benin’s economy expanded by 8.1% in 2025, and the momentum remains strong. Yet sustaining this trajectory demands far more capital. The country is already rolling out sustainable finance tools — SDG bonds, green finance, climate finance and blended finance — to fund the next phase of its structural transformation.
A transformation that requires long-term capital
A shifting economy needs funding that stretches over many years. The African Development Bank estimates that Benin must raise roughly $2.43 billion annually through 2030 to speed up its structural overhaul. Roads, power, factories, agribusinesses, digital services and water infrastructure all require heavy investment — and not all of them can be financed the same way.
Public funds remain essential, but they cannot carry the entire load. Banks, private investors, financial markets and development partners must also step in. The real challenge is channeling these diverse resources toward the projects that matter most for Benin’s economy.
Benin has already begun tackling this question. In recent years, the country has tested several forms of sustainable financing and launched reforms aimed at steering capital toward development and climate-related investments.
Diversifying funding sources: from SDG bonds to green frameworks
The first significant move came in 2021, when Benin issued €500 million in SDG bonds. What set this apart was the exclusive use of proceeds for expenditures tied to the Sustainable Development Goals. In July 2021, Benin became the first African sovereign to carry out an international SDG Eurobond issuance.
In June 2023, the country followed up by mobilizing €350 million from Deutsche Bank to finance SDG-sensitive spending. These operations demonstrate that a portion of market-raised funding can be directly linked to precise development objectives.
Benin then broadened its approach to green finance. In September 2025, the government launched its Green Finance Framework, which identifies projects eligible for green funding. Renewable energy, clean transport, water management, biodiversity, energy efficiency and climate change adaptation are among the targeted sectors.
Another workstream involves the climate taxonomy. The term may sound technical, but the concept is straightforward: defining criteria to determine which economic activities qualify as supportive of the climate transition.
The IMF notes that Benin has finalized the structure, methodology and governance rules for this taxonomy. Criteria have already been set for several sectors, including energy, agriculture, waste and forestry. Two decrees formalized this work in January 2026.
These initiatives show that sustainable finance is no longer a new idea for Benin. The country now has multiple experiences it can build on.
Bringing private capital into the fold
The next question is private investment. Benin’s needs are substantial, and public resources alone cannot cover every necessary project. But attracting private investors is not always straightforward. 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 proves useful. Its principle is to combine public or development partner resources with private capital. The initial funding can help reduce certain risks and make a project more appealing to investors.
Benin is already moving 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 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 BOAD, Benin is working on a platform to facilitate access to climate finance for banks and microfinance institutions. The goal is notably to encourage long-term investments by small and medium-sized enterprises.
This issue is critical. A company that wants to install solar equipment, cut its energy consumption or adapt its operations to climate impacts must be able to access suitable resources. Sustainable finance should not remain confined to large-scale 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 financing needs. Benin 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 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 objective 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 addresses very concrete sectors. It can support renewable energy development, strengthen water management, improve agricultural resilience or help businesses 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 set to gradually expand to other crops and 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 directs resources toward environmental projects. The climate taxonomy gives investors clear 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 key 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 mobilized resources deliver the expected results.
Benin has already set this evolution in motion. The next phase will be about scaling up — ensuring that new sustainable finance tools are not limited to a handful of operations but contribute more broadly 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 whether this growth can generate more value, reduce extreme poverty — one of the government’s priorities — and accelerate sustainable development.