The West African Development Bank (BOAD) has arranged 115 billion CFA francs ($199 million) in loans to pay for cotton purchases, ginning, storage and marketing costs during Benin’s 2014/15 cotton season, it said on Friday.
The regional bank will lend 25 billion CFA as part of the financing, while a pool of banks including Ecobank, BOA , Banque Atlantique, BGFI Bank, Diamond Bank , BSIC and UBA will contribute the balance.
This will be the third season that the BOAD has arranged financing for the crop after Benin’s government took over management of the cotton sector in 2012.
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Benin lowered the cotton farmgate price for the 2014/15 season, prompting anger from cotton farmers.
However, the new price of 250 CFA francs per kg remains higher than other regional producers, and potentially risks putting a strain on government finances, according to an Ecobank Research report.
Benin produced 307,355 tons of raw cotton in the 2013/14 season, according to the BOAD statement and is projecting output of 360,000 tonnes this season.
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