How did Togolese banks finance the economy during the past quarter?

Finance

Tuesday, 03 April 2018 17:18

How did Togolese banks finance the economy during the past quarter?

(Togo First) - Cost of credits from the Central Bank of West African States (BCEAO) to Togo has risen by 54 basis points from 8.2% at the end of December 2017 to 8.74% at the end of January 2018. In January, apart from the private individuals segment where this figure slumped by 22 basis points, average rates for consumer credit increased. This was disclosed in the Central Bank’s monthly report for January.

A significant rise was recorded with loans granted to the State and related organizations. Indeed, from 6.44% in December, rates imposed by banks on these loans rose to 10% in January. This could explain why the banking sector decided to reduce its exposure which mainly results from the pre-financing mechanism used by Lomé to support the massive investment it made over the past few years in the infrastructure sector.

Besides banking loans, rates on bonds have also soared since the beginning of the year. Recently, Togo successfully issued a bond at a rate of 6.5% per coupon. Yet, data shows that State companies keep buying loans at relatively affordable rates (7.75%), even if these rates rose slightly over the period reviewed (+1%).

Besides the State, rates imposed to private companies also rose, nearing a two-digit figure, while traditional guarantees remain reasonable. Interest rates imposed by Togolese lenders to these structures currently stand at 10.07%, thus the highest rates in the whole country, up from 9.54% at the end of January 2018.

Fiacre E. Kakpo

REFORMS OVERVIEW

STARTING A BUSINESS (more info)

At the fifteenth position, worldwide, and first in Africa, under the Starting a Business index of the 2020 Doing Business ranking, Togo sustains its reformative dynamics with more reforms….

ENFORCING CONTRACTS (more info)

Compared to some years ago when it was one of the lowest rankers under the Doing Business’ Enforcing Contracts indicator, Togo, leveraging many efforts to improve its business climate, was able to jump significantly on the index in the recent years... .

CONTRACT EXECUTION (more info)

Creation of special chambers of commerce for small debts • Creation of chambers of commerce at the Court of Appeal • Civil and commercial cases now handled by distinct clerks • Establishment of commercial courts in Lomé and Kara • Lawyers and bailiffs now have access to the FORSETI COMMERCIAL platform • A maximum period of 100 days was fixed to settle a commercial dispute .

TRADING ACROSS BORDERS (more info)

In comparison to previous years,Togo has significantly improved its ranking under the“Trading across borders” indicator by adopting multiple reforms that focus mainly on the digitization and reduction in delays, for import and export procedures related to import and export.

In comparison to previous years, Togo has significantly improved its ranking on the “Trading across borders” index by adopting multiple reforms that focus mainly on the digitalization and reduction in delays, for import and export procedures related to import and export.

CONSTRUCTION PERMIT (more info)

After moving from the 133rd to 127th place under the 2020 Doing Business’ construction permit index, Togo intends to reiterate this feat in the coming edition of the global ranking. To this end, it has introduced this year multiple reforms.

GETTING ELECTRICITY (more info)

Over the past two years, Togo’s ranking under the Doing Business’ Getting electricity and water indicator has increased consistently. Owing this performance to multiple reforms aimed at making it easier for businesses to access power and water, Lomé plans to introduce even more reforms this year to keep up its improvements.

REGISTERING A PROPERTY (more info)

Out of all the 'Doing Business’ indicators, Property Registration is where Togo has improved the most since 2018. Indeed, after spending years in the lowest part of this ranking, the country now seeks to beat Rwanda which is the best performer on this index in Africa. To do so, Lomé has been introducing many reforms, with the latest batch implemented this year.

PUBLIC PROCUREMENT (more info)

From professionalization to digitization, through legislative regulations, Togo’s public procurement framework is constantly being modernized. Several reforms have been implemented to improve the sector much to the benefit of the private sector, which is the focus of the National Development Plan.

PAYING TAXES AND DUTIES (more info)

To improve its business environment, Togo introduced some important reforms related to the payment of tax and duties. From the replacement of some taxes to the cancellation of others through exemptions, the country has only one objective: offer the most attractive tax framework to investors and economic operators. To achieve this, the authorities relied on digitization.