The Community Inventory Credit in Rural Africa - A theoretical approach

Details

Supervisors

Parienté, William

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation générale, à finalité spécialisée

Abstract

Inventory credit is a financial device that combines the allocation of loan in exchange of the providing of a food crop amount, that serves the role of a collateral. Designed to target rural population, the beneficiaries smallholders accept to lock their crop in a warehouse till the end of the loan reimbursement period. Our contribution is aiming to give the start of an answer to the question : is Community Inventory Credit a reliable mean to improve rural remote households food security ? We decided to adapt the two-period model of Gross, Guirkinger and Platteau to our research question. Thanks to their theoretical frame, we were able to construct a version of their model where nutritional status could interact with Community Credit variables as well as food crop prices. We also added in our version an investment component, made possible through the deliverance of the loan, that came as an intuition from our Beninese experience. Our results suggest a positive answer to our research question. Indeed, both price inflation and the return rate of the investment seems to enhance the households food security, by allowing a greater food crop transfer from the harvest to the lean season.