• Togo attracts pan-African banking groups
  • Togo attracts pan-African banking groups

Togo attracts pan-African banking groups

Togo has enjoyed political stability in recent years, which has helped attract banking institutions. With only 7 commercial banks in the early 2000s, the banking industry now includes 13, including 11 branches. The rush in Pan-African banks in Togo is the result of important reforms initiated by the country’s authorities to improve the business environment, showing a bright future for the sector.

For a long time, access to a bank account in Togo was a luxury reserved for a fringe of the population mainly due to traditional hoarding habits and to the low incomes of the population with 60% of young people. However, the various reforms undertaken by the Togolese authorities since 2008 to boost the business environment, especially the establishment of a single window for foreign trade, tax relief and greater investment protection have boosted the banking industry. This trend was manifest immediately with the increase in the banking rate. Today with 19.61%, Togo has the second best banking rate in the UEMOA area after the Ivory Coast. For Dr. Blaise Ayira, Professor of Economics at the University of Lomé, this situation is due to several factors. “These are: political stability; the strategic position of Togo as an import gateway for the landlocked countries – with the policy of major works carried out at the port, the airport and the road network. It should also be noted that the improved business environment, the development of the mining sector, and the evolution of public investment have contributed to the booming banking industry.

Advantages for Togo

Today, Togo offers the best banking network penetration in UEMOA zone with 1 desk for 35,000 inhabitants against 45,000 in the Ivory Coast and 164,000 in Niger. The geographical penetration also follows a rising trend with a sales unit for 336km² compared with 629 in the Ivory Coast and 13,000 in Niger. The country’s deposit/GDP ratio has also registered an upward trend over the last three years, reaching 38% in 2016; which is higher than the average ratio within UEMOA zone, i.e. 25%. “The Togolese banking market has been booming for a few years, thus attracting large banking groups. I believe that with the ongoing macroeconomic and structural reforms, Togo will be slated to become, over the years, a Singapore of the sub-region, that is, a reliable financial hub. But before we got to that point, we had to consolidate the banking sector. Today, this rush is due to the confidence in the sector,” explained Charles Mivedor, a banking and finance consultant. According to the Central Bank of West African States (CBWAS), the banking activity, measured in total balance sheet, has increased by 15% year-on-year to stand at CFA 2.003 billion at the end of June 2016 against CFA 1.928 billion in 2015.

Pan-African banks get involved

After the establishment of several pan-African banking groups, including Diamond Bank and Attijaribank in 2011, followed by Bank of Africa in 2012 and Société Générale in 2016, the United Bank of Africa is planning to establish a branch to Togo. This Nigerian banking group, operating in 19 African countries, with more than 8 million customers in various sales units around the world, is planning to establish in Togo very soon. Tony O. Elumelu, President of the banking group, confirmed his company’s intention to take advantage of the booming Togolese banking market during his recent visit to the country. “Our bank’s African branches are growing strongly and we intend to take advantage of this to evaluate the strength points of the sector in Togo,” he said. As for Kossi Ténou, the national director of the Central Bank of West African States (BCEAO), he believes that the indicators are generally satisfactory and that this attracts the major banking groups: “there is a strong mobilization of Savings, credit growth, downward interest rates and free banking services, which help boost activity and attract banking groups.”

Future prospects for the market

All signals are clear to make this sector one of the pillars of the national economy. However, it faces the growing performance of microfinance institutions, which also contribute 20-30% to the Gross Domestic Product. But for the stakeholders in the sector, a coexistence with the decentralized financial systems would not disrupt the growing banking market in Togo. “The banks work with microfinance institutions that are also their customers. They are there to reach the most vulnerable population excluded from the traditional banking system” reassures the top management of the Association of Microfinance Institutions Professionals (APIM-Togo), and then he concluded: “the sector also relies on the digital economy and the privatization of banks that has already impelled the Togolese Government”.


Author: Kouevi Mawu // Photos: Banks, Bank Diamond, Togolese Bank for Trade and Industry © DR

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