Boosting Youth Entrepreneurship through Informal Credit in Benin

A lack of public sector employment opportunities in Benin is pushing youth into self-employment. About 35% of youth are self-employed in Small and Medium Enterprises (SMEs) and 26% are in non-paid family work, whereas only around 19% are in wage employment. However, youth entrepreneurs face important limitations to the growth and sustainability of their businesses. Lack of credit to start or grow a business is one of the main obstacles for Benin’s young entrepreneurs, over 60% of whom rely on personal funds or money from friends and family. A local team of PEP researchers sought to investigate how the impact of credit on the performance on Benin’s youth enterprises varies according to the type of credit. They also explored whether gender and age influence the impact.