Author ORCID Identifier

Year of Publication


Degree Name

Doctor of Philosophy (PhD)

Document Type

Doctoral Dissertation


Agriculture, Food and Environment


Agricultural Economics

First Advisor

Dr. Yoko Kusunose

Second Advisor

Dr. Leigh Maynard


Limited access to financial services is known as a major constraint to agricultural development (FAO, 2002). Farmers need liquidity to face agricultural expenses throughout the production cycle but mainly at the beginning. Mainstream financial institutions are reluctant to serve the agricultural sector for several reasons. First, they consider the sector to be highly risky with low performance. Also, agricultural activities depend on the weather, they take place in remote rural areas, and commodities prices are volatile. All these aspects make it hard for standard banks to reach their profit goals when lending to farmers. Since microfinance was conceived, it has generated a lot of hope for alleviating poverty in low-income countries. Microfinance provides the poor with access to affordable capital by granting low-income individuals with loans they would not otherwise have access to, because of economic and geographic constraints.

The goal of the dissertation is to examine the role and the importance of microfinance in the agricultural sector of developing countries. A survey took place in October 2017, in both rural and urban areas of Benin and involved 750 agricultural households. Three different agricultural zones were selected: the North-East (cotton zone); the Center (tubers and cashew nut zone) and the South (a region with special crops such as vegetables, pineapple, palm tree, exotic plants). The study focuses on agricultural loans. It includes clients of the major microfinance institution in Benin: FECECAM - Faîtière des Caisses d’Epargne et de Crédit Agricole Mutuel.

This research contributes to the literature in several ways. The study allows shedding light on the effects of agricultural loans, specifically, on households’ efficiency and labor employment, which are mostly overlooked in the microfinance literature. To overcome selection bias in microcredit evaluation, the research employs a pipeline design. Control and treatment groups consist of individuals who have chosen to participate in the microfinance program. The loan treatment considered is the experience with loans which includes program entry timing, loan take-up frequency, and the average amount of loan obtained over the 2012-2017 period. The study employs a cluster analysis technique to create reliable comparable groups.

Multiple variables and indicators are analyzed. A descriptive analysis of loan impact on farmers’ labor input choices shows that past loans have residual effects on both hired and family labor use. Farm loans, especially those obtained for farm machinery significantly reduce expenditure on hired labor but more family labor is employed using machine loans while other loan categories reduced the use of family labor. The evaluation of the whole-farm efficiency of borrowers in the presence of agricultural loans reveals significant technical and allocative errors leading to profit loss in all studied regions. However, experience with loans significantly increases farmers’ whole-farm efficiency, particularly in the North. Finally, the assessment of well-being indicators suggests that those farm loans have a significant positive impact on sampled recipients’ net farm income, food security and food quality statuses. Agricultural loans also have a positive impact on women’s empowerment. The monitoring and implementation mechanism of FECECAM played a crucial role in the success of its loan programs.

Digital Object Identifier (DOI)

Funding Information

Funding for this research was provided by the German Development Institute (Deutsches Institut für Entwicklungspolitik (DIE)).