Togo’s bad loans nearly double in one year, raising pressure on banks

Banking

Wednesday, 06 May 2026 14:56

Togo’s bad loans nearly double in one year, raising pressure on banks

(Togo First) - In the space of twelve months, the share of non-performing loans in Togo’s banking sector has nearly doubled, according to data published in the Central Bank of West African States’ (BCEAO) March 2026 monthly bulletin.

In February 2026, the gross non-performing loan ratio at Togolese banks reached 13.5%, up from 7.2% a year earlier. In absolute terms, non-performing loans rose from 171.5 billion CFA francs in February 2025 to 318.2 billion a year later, an increase of 85% over the period. That marks the sharpest deterioration recorded across the WAEMU zone on this indicator.

The net NPL ratio, which measures banks’ remaining exposure after provisions, stood at 8.2%, compared with 2.7% in February 2025. More troubling still, the provisioning coverage ratio for doubtful loans fell sharply, dropping from 63.9% to 42.3% in one year. Togolese banks are setting aside proportionally less to absorb potential losses.

“Such a rapid deterioration generally reflects a combination of unanticipated sectoral shocks and an insufficiently forward-looking provisioning policy,” a banking analyst said.

The deterioration is unfolding even as Togolese banks remain highly liquid. Their reserves at the BCEAO reached 166.3 billion CFA francs in March 2026, against required reserves of just 74.2 billion. But faced with weakening asset quality, banks are favouring caution over credit expansion.

Sectoral data offer some clues to the deterioration. Outstanding short-term lending to Togo’s trade sector fell from 292 billion CFA francs in November 2025 to 148 billion in January 2026, a contraction of nearly 50% in two months. At the same time, banks are charging an average lending rate of 7.51%, among the highest in the WAEMU zone and well above the 6.40% charged in Côte d'Ivoire. Costly credit, becoming increasingly scarce, is being extended to already-fragile borrowers, increasing the risk of arrears.

Adding to the pressure, banks hold 623.5 billion CFA francs in exposure to Togolese government debt, limiting the funds available for private-sector lending.

The BCEAO is expected to publish its next monthly data in the coming weeks. The figures will show whether the deterioration in Togo’s loan portfolio has stabilised or continues to worsen.

Fiacre 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.