“Banks are no longer supporting us.” This recurring lament from local entrepreneurs engaged in public procurement paints a clear picture of a significant hurdle for Togo’s private sector. Small and medium-sized enterprises (SMEs) and state contractors are reporting increasingly stringent conditions for obtaining bank credits and pre-financing, which is impeding the progress of numerous infrastructure projects and public contracts across the nation.
The spiral of unsettled debts
At the root of this reluctance from financial institutions lies a structural issue: the persistent accumulation of unpaid debts following the execution of public contracts. To undertake work commissioned by public administrations, businesses heavily rely on bank loans. However, when payment delays occur from the treasury or public entities, the repayment chain breaks, leaving companies unable to meet their bank obligations on time.
Analysis by Dr. LANDOZI Saharou: “A direct impact on bank profitability”
In an analysis published on August 31, 2026, Dr. LANDOZI Saharou, a corporate finance specialist and economist, meticulously explains the banking mechanisms currently hindering access to credit:
“When a public contract experiences payment delays, the associated bank credit progressively deteriorates, eventually categorizing as doubtful or non-performing loans (NPLs). In adherence to the prudential requirements set by the Central Bank of West African States (BCEAO), the bank is then compelled to immobilize its own funds by setting aside substantial coverage provisions. This constraint significantly reduces its liquidity and its capacity to extend new financing.”
This phenomenon has been reflected in the sector’s overall performance: the Togolese financial market recorded cumulative net losses at the close of the 2025 fiscal year within the UMOA zone. These losses were directly attributed to the heavy burden of provisions mandated to cover non-performing loans linked to public procurement projects, a critical piece of African news today concerning the economy.
On the ground, managers of construction and public works SMEs describe daily operational paralysis:
- “We find ourselves caught in a dilemma. On one hand, the state demands project completion according to specifications. On the other, banks freeze our overdraft facilities the moment a payment is delayed. We act as a buffer, absorbing cash flow shocks with our own capital, which ultimately depletes our working funds.”
- “Banks are now demanding real guarantees that are almost impossible for simple pre-financing of contracts. Without a public guarantee mechanism or endorsement, smaller local businesses can no longer compete against larger groups.”
Recommendations: moving towards equitable risk sharing
Faced with this impasse, Dr. LANDOZI Saharou and several financial experts advocate for a comprehensive review of public procurement governance, proposing a model based on shared risk:
- Creation of a dedicated guarantee fund: This would secure commitments made by SMEs to banks, thereby reducing the required provisioning rates.
- Utilization of escrow accounts: Ensuring transparency and direct allocation of public payments towards the repayment of granted bank loans.
- Securitization of arrears: Transforming accumulated public debts into negotiable securities to clean up bank balance sheets and release liquidity.
According to Dr. LANDOZI Saharou, implementing these reforms would enable commercial banks to reclaim their vital role as economic drivers: “remaining profitable while continuing to finance national development and public procurement securely.” This strategic shift is crucial for Africa politics English discussions on economic stability and growth.
