A common refrain echoes among local entrepreneurs engaged in public contracts: “Banks no longer stand with us.” This sentiment underscores a significant hurdle 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 the progress of numerous infrastructure projects and public works.

The escalating cycle of unsettled debts

At the heart of financial institutions’ reluctance lies a systemic issue: the accumulation of unpaid invoices following the completion of public contracts. To execute projects commissioned by public administrations, businesses heavily rely on bank loans. However, when the treasury or public entities delay payments, the repayment chain breaks, leaving companies unable to meet their bank deadlines.

Dr. LANDOZI Saharou’s analysis: “A direct impact on bank profitability”

In an analysis published on August 31, 2026, Dr. LANDOZI Saharou, a distinguished corporate finance specialist and economist, illuminated the banking mechanisms currently impeding credit access:

“When a public contract experiences payment delays, the associated bank credit gradually deteriorates, eventually categorizing as doubtful or non-performing loans (NPLs). Adhering to the prudential requirements set by the Central Bank of West African States (BCEAO), banks are then compelled to tie up significant capital by setting aside substantial provisions. This constraint severely reduces their liquidity and their capacity to extend new financing.”

This phenomenon has had a palpable impact on 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, primarily due to the heavy burden of provisions required to cover non-performing loans linked to public procurement projects.

On the ground, construction and public works (BTP) SME managers describe daily operational impasses:

• “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 cash flow shocks with our own funds, which rapidly depletes our working capital.”
• “Banks now demand tangible guarantees that are almost impossible for simple market pre-financings. Without a public guarantee or endorsement mechanism, small local businesses can no longer compete against larger groups.”

Recommendations: moving towards equitable risk sharing

To overcome this deadlock, 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 vital role as economic drivers: “remaining profitable while securely continuing to finance national development and public procurement.”