AfDB Approves €117 Million to Boost Local Economic Development in Benin

The African Development Bank Group (AfDB) has approved a €117 million financing package to launch the Support Programme for the Economic Development of Local Authorities (PADECT) in the Republic of Benin. The initiative, approved on 24 October 2025, seeks to transform the country's 77 municipalities into vibrant economic hubs for private investment, entrepreneurship, and job creation between 2026 and 2031.

A Transformative Investment for Local Growth

The newly approved programme marks a milestone in Benin's decentralised development agenda. With this investment, the AfDB aims to empower local governments to become key actors in driving inclusive growth, improving service delivery, and attracting private investment into local economies.

The financing comprises two loans — €110 million from the African Development Bank and €7 million from the African Development Fund, the Bank's concessional window for low-income countries. The initiative will be implemented by Benin's Ministry of Economy and Finance through its Economic and Financial Programme Monitoring Unit, ensuring alignment with national planning priorities.

AfDB's Country Manager for Benin, Robert Masumbuko, described PADECT as a groundbreaking intervention: "This project is the Bank's very first sub-national financing in Benin. We congratulate the national authorities for this remarkable innovation. The Bank is proud to support Benin in strengthening local governance and boosting regional economies."

Strengthening Municipal Governance and Investment Capacity

At the heart of PADECT lies the goal of strengthening the institutional and financial capacity of Benin's 77 municipalities to plan and implement annual investment programs effectively. The project will provide local administrations with tools, training, and resources to manage infrastructure, mobilize domestic resources, and deliver essential services more efficiently.

A central focus will be on enhancing access to finance for small and medium-sized enterprises (SMEs), which are critical engines of local job creation. This will be achieved through strategic partnerships with the Small and Medium-sized Enterprise Development Agency and the Investment and Guarantee Fund for Small and Medium-sized Enterprises (Fonds de Garantie des PME). These measures aim to unlock new credit lines and guarantees for local entrepreneurs, promoting business expansion and innovation at the community level.

Driving Digital Transformation Across Municipalities

Digitalization is one of PADECT's most transformative pillars. The programme envisions the deployment of telecommunications infrastructure in 89 public facilities, including town halls, schools, universities, and hospitals, to improve digital connectivity and public service delivery.

In addition, mobile network coverage will be extended to 114 underserved localities, many of which currently lack reliable access to telecommunications services. To bridge the digital divide, the initiative will also establish 65 community digital points equipped with affordable internet access and e-services. These centres will help local residents — especially youth and women — access digital skills training, e-governance platforms, and online business opportunities.

By fostering a digitally inclusive environment, the AfDB hopes to boost innovation and entrepreneurship, facilitate remote education and healthcare, and enable municipalities to use data-driven approaches in local governance and planning.

Empowering Women and Advancing Climate Resilience

In line with the Bank's gender and climate action priorities, the programme includes dedicated components to empower women and promote environmental sustainability. PADECT aims for at least 30 percent female participation in project implementation and local decision-making processes.

Women-led initiatives will be prioritised in municipal climate adaptation projects financed through the National Disaster Response Fund and the National Environment and Climate Fund. These activities will focus on climate risk prevention, waste management, reforestation, and community-based adaptation, helping municipalities strengthen resilience against climate-related disasters.

The AfDB sees gender equality as a driver of both economic growth and community resilience. "Women are key to sustainable development at the local level. Their leadership in climate action and entrepreneurship must be supported through targeted resources," noted a senior Bank representative.

Results-Based Financing: A New Model for Accountability

PADECT represents a strategic evolution in the AfDB's approach to development financing. The programme will adopt a results-based financing model, with nine disbursement-linked indicators to ensure measurable outcomes.

"This programme marks a strategic upgrade in the Bank's support to Benin by moving from an activity-based financing approach to a performance-based model," said Ammar Kessab, AfDB's Principal Programme Officer. The model will tie financial disbursements to tangible results such as infrastructure completion, job creation, digital access expansion, and gender equity outcomes — reinforcing accountability and value for money.

Aligning with Benin's National Vision and Decentralization Goals

PADECT aligns with Benin's National Decentralization and Devolution Policy (2024–2033) and the country's long-term development vision "Benin 2060 ALAFIA", which envisions a prosperous, resilient, and digitally connected nation.

The programme will also complement the government's efforts to strengthen fiscal decentralization and local governance, ensuring that municipalities play a greater role in achieving national economic transformation goals.

Benin has made steady progress in decentralization reforms over the past decade, but many municipalities still face limited fiscal autonomy and inadequate access to financing. PADECT is expected to bridge these gaps, turning local authorities into engines of inclusive and sustainable growth.

A Model for Decentralized Development in Africa

Beyond Benin, the AfDB views this project as a replicable model for sub-national economic transformation across Africa. By linking local investment, digital transformation, climate action, and gender inclusion, PADECT demonstrates how development finance can be used to empower communities and foster equitable growth.

As the country prepares to launch implementation in 2026, the programme is set to create thousands of jobs, boost rural entrepreneurship, and enhance the quality of life for millions of Beninese citizens.

Through this initiative, the African Development Bank reaffirms its commitment to inclusive growth, resilient infrastructure, and empowered local governance — ensuring that no community is left behind in Benin's journey toward sustainable prosperity.