From The Income Statement Analysis to The Suitability of Microfinance Institutions Interest Rates: Case of Maize Production in Northern Benin

Sosthene F. TOKOUDAGBA

Volume : V, Issue : I, January - 2015

From The Income Statement Analysis to The Suitability of Microfinance Institutions Interest Rates: Case of Maize Production in Northern Benin

Sosthene F. Tokoudagba

Abstract :

This study analyses the suitability of interest rates charged by microfinance institutions and the profitability of maize production in northern Benin. To do so, the income statement was established. Then, the average return to capital was used as an indicator of profitability to examine the possibility for farmers to get loans at given interest rates and to be able to pay back these loans and the related interests. The case study was conducted in the municipalities of Banikoara and Bembèrèkè in Northern Benin. A total of 167 maize producers was selected through random sampling techniques, and investigated on the basis of a questionnaire. The data analysis revealed that the interests paid on loans represent about 7% of the total production costs for per hectare of maize. In addition, maize production was found to be a profitable activity because it provides a good remuneration of theinvested capital. The average return to capital was indeed statistically higher that the current interest rates charged by microfinance institutions mainly represented by the Local Bank of Mutual Agricultural Credit (CLCAM) and the Association for the Promotion and Development Support of the Micro–enterprises (PADME).