Togolese Banks Hold Billions in Excess Reserves as Lending Declines

Banking

Thursday, 04 December 2025 14:55

Togolese Banks Hold Billions in Excess Reserves as Lending Declines

(Togo First) - Banks in Togo continue to hold reserves consistently above the minimum required by the Central Bank of West African States (BCEAO), according to official data.

Reserve requirements help preserve banking-system stability by ensuring a minimum level of liquidity and influencing how much banks can lend.

Between January and September 2025, required reserves at Togolese banks ranged from 66.7 billion to 72.6 billion CFA francs, the October Monthly Statistics Bulletin showed. Actual reserves were much higher, rising and falling between 116.9 billion and 164.9 billion CFA francs over the same period.

This indicates a strong preference for liquidity, with banks maintaining a sizeable buffer above the regulatory threshold.

Reserves peaked at 164.9 billion CFA francs from mid-January to mid-February before falling to 123.6 billion in May and 118.8 billion in June. They then briefly rebounded to 157.6 billion between June 16 and July 15, before dropping again to 116.9 billion in September.

The volatility may reflect banks’ efforts to balance liquidity management, financing needs and investment opportunities in regional markets.

Large excess reserves give banks a comfortable cushion to meet withdrawals and manage risk, but they also directly reduce the funds available for lending, since liquidity parked at the BCEAO does not circulate in the real economy.

By the end of the first quarter of 2025, outstanding bank credit in Togo totalled 1,788.3 billion CFA francs, down 5.5% year-on-year.

Ayi Renaud Dossavi

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