Regional market: WAEMU countries seek $12.3 bln, this year, in an overheated market

Public finance

Wednesday, 05 April 2023 11:56

Regional market: WAEMU countries seek $12.3 bln, this year, in an overheated market

(Togo First) - Faced with rising financing needs, a widening budget deficit, and difficult access to international financing markets, WAEMU countries are turning to the regional financial market. Once again, their target is up year-on-year this year in an overheated market.

The eight West African Economic and Monetary Union (WAEMU) countries recently unveiled their funding expectations from the regional public securities this year. Overall they want to raise CFAF 7,429 billion ($12.3 billion) by auctioning public securities through Umoa-titres, a regional central bank institution specialized in the management and promotion of public securities.

The targeted financing is up by 59% compared to 2022 when they were targeting CFAF4,672 billion from the market but finally raised CFAF 5, 254 billion.

As usual, Côte d'Ivoire has the greatest demand with a target of CFAF 2,080 billion. It is followed by Senegal, which seeks CFAF 1,565 billion to meet its financing needs. Mali, which was out of the market for the first half of 2022, is coming back with full force, aiming to raise CFAF 1,109 billion. Niger plans to raise CFAF 830 billion, while Burkina Faso plans to raise CFAF 630 billion. Togo plans to mobilize CFAF 580 billion against CFAF 515 billion for Benin. As for Guinea-Bissau, it seeks CFAF 120 billion.

The increased targets reflect the growing financing needs of WAEMU countries. The countries face large budget deficits and increasingly urgent financing needs. But because of restrictions on international financial market access, they are forced to turn to the regional financial market to meet their financing needs. This solution also poses some challenges.

The regional financial market has been an important tool for WAEMU countries to raise financing in recent years. However, the heavily pressured market is getting overheated.

Over the past nine months, the central bank (BCEAO) has raised policy rates four times to curb rising inflation, which was partly triggered by the massive liquidity injections made in 2020 and 2021 to boost the regional economy. The tightening of the Central Bank's monetary policy has led to an increase in market interest rates, which has made financing more expensive for countries.

In addition, with the rise in the supply of government securities, the market is getting saturated, resulting in higher interest rates being charged for these securities. Issuance operations are no longer as successful as they used to be, with yields rising wildly since the middle of last year and continuing to rise this year.

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.