Comparative analysis of the effect of credit from FECECAM and SIAN’SON microfinance on the economic efficiency of maize production in northern Benin

Abstract

The economic inefficiency of production in developing countries constitutes a threat to food security in these countries where poverty levels are critical. One of the explanatory factors for this economic attribute of production is the lack of investment in agriculture and the low access to agricultural credit.

The objective of the research is to evaluate the effect of credit on the economic efficiency of maize producers in northern Benin in order to test the thesis that access to credit for maize producers constitutes a credible alternative for boost the economic efficiency of corn production in Benin.

A socio-economic survey was carried out on a random sample of 150 producers receiving agricultural credit from SIAN’SON microfinance, 150 producers receiving agricultural credit from FECECAM and 150 non-beneficiary producers in three municipalities in northern Benin. A stochastic frontier model was estimated and mean comparison tests were performed to assess the effect of credit on beneficiaries and non-beneficiaries of credit at the level of the two microcredit institutions.

The results obtained show that the average technical efficiency of maize producers is 72.49%. The average allocative efficiency of maize producers is 0.8391 and that of economic efficiency is 0.6063. There is greater economic efficiency for credit recipients compared to non-credit recipients. The mean of the efficiency scores is positively significant at the 1% level.

Access to credit improves the economic efficiency of production. The SIAN’SON microfinance credit is economically efficient in the production of maize, therefore it would seem more suitable for the production of maize compared to that of FECECAM.

Keywords. FECECAM, SIAN’SON microfinance, economic efficiency, Northern Benin.

JEL Classification: G 23

Paper type: Empirical research