Locking Crops to Unlock Investment : Experimental Evidence on Warrantage in Burkina Faso
Warrantage is an innovative model of rural finance with the potential to overcome credit, storage, and commitment constraints
Abstract
Financial market imperfections remain pervasive in developing countries, constraining potentially profitable investment decisions, especially for rural smallholder farmers. Warrantage is an innovative model of rural finance with the potential to overcome credit, storage, and commitment constraints through a localized inventory credit scheme. Exploiting random variations in household access to warrantage and intensity of access across villages, this paper studies the direct impact of this scheme on beneficiaries as well as its spillover effects. Take-up of storage is high (94 percent), while credit take-up is moderate (38 percent). Households with access to warrantage primarily store sorghum and maize and sell their production over an extended period of time, earning higher average prices and resulting in higher sales revenue ($248, or 33 percent, on average). Increased incomes are spent on long-term investments, including human capital expenditures (education), livestock purchases, and investment in agricultural inputs for the subsequent year.
This work is part of the Closing the Gender Gap in Africa: evaluating new policies and programmes for women’s economic empowerment programme
Citation
Delavallade, Clara Anne; Godlonton,Susan.2020. Locking Crops to Unlock Investment : Experimental Evidence on Warrantage in Burkina Faso (English). Policy Research working paper; no. WPS 9248 Washington, D.C. : World Bank Group.
Link
Locking Crops to Unlock Investment : Experimental Evidence on Warrantage in Burkina Faso