A common lament echoes among local entrepreneurs engaged in Togo’s public procurement sector: «Banks are no longer supporting us.» This sentiment highlights a significant hurdle for the nation’s private businesses. 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 execution of numerous infrastructure projects and public works.
The spiral of unsettled claims
At the core of this reluctance from financial institutions lies a fundamental structural issue: the mounting accumulation of unpaid invoices following the completion of public contracts.
To carry out projects commissioned by public administrations, businesses heavily rely on bank loans. However, when payment delays occur from the national treasury or other public entities, the repayment chain breaks. This leaves companies unable to meet their financial obligations to banks on time, creating a ripple effect across the sector.
Dr. LANDOZI Saharou’s analysis: «A direct impact on bank profitability»
In an analysis published on August 31, 2026, Dr. LANDOZI Saharou, an expert in corporate finance and economics, meticulously explains 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 of the Central Bank of West African States (BCEAO), the bank is then compelled to tie up its equity by making substantial coverage provisions. This constraint significantly reduces its liquidity and its capacity to extend new financing.»
This phenomenon has visibly impacted the overall performance of the sector. Togo’s financial market recorded cumulative net losses at the close of the 2025 fiscal year within the UMOA zone, primarily due to the considerable weight of provisions mandated to cover non-performing loans linked to public procurement projects.
Operational hurdles for construction SMEs
On the ground, managers of construction and public works (BTP) SMEs describe daily operational paralysis:
«We find ourselves caught between a rock and a hard place. 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 cash flow shocks with our own funds, which rapidly depletes our working capital.»
«Banks are now demanding tangible guarantees that are almost impossible for small businesses to provide for simple market pre-financings. Without a public guarantee or endorsement mechanism, local small enterprises can no longer compete against larger corporations.»
Recommendations: towards equitable risk sharing
Faced with this deadlock, Dr. LANDOZI Saharou and several financial experts advocate for a re-evaluation of public procurement governance, proposing a model of shared risks:
- Creation of a dedicated guarantee fund: To secure commitments made by SMEs to banks, thereby reducing the rates of provisioning required.
- 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, cleaning up bank balance sheets and freeing up 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 safely finance national development and public procurement.»
