A recurring complaint echoes among local entrepreneurs engaged in public procurement: « The banks no longer support us. » This statement highlights a significant impediment for Togo’s private sector. Small and Medium-sized Enterprises (SMEs) and state contractors report increasingly stringent conditions for obtaining bank credits and pre-financing, which in turn slows down the progress of numerous infrastructure projects and public works.
The spiral of unsettled claims
At the heart of financial institutions’ reluctance lies a systemic issue: the accumulation of unpaid invoices following the execution of public contracts.
To carry out projects commissioned by public administrations, businesses heavily rely on bank loans. However, when delays in payments occur from the treasury or public entities, the repayment cycle is disrupted. This leaves companies unable to meet their financial obligations to banks on schedule.
Dr. LANDOZI Saharou’s analysis: « A direct impact on bank profitability »
In an analysis released on August 31, 2026, Dr. LANDOZI Saharou, a corporate finance specialist and economist, meticulously breaks down the banking mechanisms currently restricting 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 compliance with the prudential requirements set by the Central Bank of West African States (BCEAO), banks are then compelled to allocate substantial provisions from their own capital to cover these risks. This constraint significantly reduces their liquidity and their capacity to grant new financing. »
This phenomenon has manifested in the overall performance of the sector: the Togolese financial market recorded cumulative net losses at the close of the 2025 fiscal year within the UMOA zone, primarily due to the burden of provisions mandated for covering non-performing loans linked to public procurement projects.
On the ground, construction and public works (BTP) SME managers describe daily operational roadblocks:
« We find ourselves caught between two pressures. On one side, the State demands that work progresses according to specifications. On the other, banks freeze our overdraft facilities as soon as an invoice is delayed. We act as a buffer, absorbing treasury shocks with our own funds, which depletes our working capital. »
« Banks are now demanding real guarantees that are almost impossible for us to provide for simple market pre-financings. Without a public guarantee mechanism or endorsement, small local businesses cannot compete with larger groups. »
Recommendations: towards an equitable sharing of risks
To address this stalemate, Dr. LANDOZI Saharou and several financial experts advocate for a re-evaluation of public procurement governance, proposing a risk-sharing model:
- Creation of a dedicated guarantee fund: To secure commitments made by SMEs to banks, thereby reducing provisioning rates.
- Utilization of escrow accounts: To ensure the traceability and direct allocation of public payments towards the repayment of granted bank loans.
- Securitization of arrears: To transform accumulated public debts into negotiable securities, thereby cleaning up bank balance sheets and freeing up liquidity.
According to Dr. LANDOZI Saharou, implementing these reforms would enable commercial banks to reclaim their role as an economic engine: « remaining profitable while continuing to securely finance national development and public procurement. » This would be a significant step for the African economy today, particularly in West Africa news related to finance.
