Microfinance: Outstanding loans in Togo grew by 34% in 2021

Finance

Tuesday, 19 April 2022 18:46

Microfinance: Outstanding loans in Togo grew by 34% in 2021

(Togo First) - Last year, outstanding loans granted by microfinance institutions in Togo soared by more than 30%, reaching CFA249 billion. That is after stagnating in 2020, due to Covid-19.

According to the BCEAO, West Africa's Central Bank, the surge is attributable to the progressive resumption of economic activities which had been hampered by the health crisis.

Not just in Togo, the upward trend was recorded in Côte d'Ivoire (+27.6%), Burkina (+23.4%), Benin (+35.4%), Mali (+31.9%), and Senegal (+8.5%) as well.

Renewed Trust

Overall, Togolese microfinance institutions served 3.7 million customers in 2021, including 600,000 new clients. The increase bolstered collected deposits which stood at CFA68 billion last year, up by 29.5% compared to 2020. Savers, however, remained cautious about their exposure, preferring to use sight deposits.

Across the West African Monetary Union (WAMU), "sight deposits are predominant with a share of 57.3% of total deposits. Time deposits and other deposits account for 21.1% and 21.6% respectively. In addition, 48.7% of the savings mobilized by Decentralized Finance Institutions (DFIs) were constituted by men, 26.9% by women, and 24.4% by groups," the central bank said. This trend seems to be the same in Togo.

One hundred more service points

The number of service points has also increased. According to the BCEAO, microfinance entities have responded to the increase in activities by multiplying the number of service points. There were at least 660 of them at the end of last year, compared to about 518 in 2020.

Delinquent receivables down

After exploding in 2020, due to the health crisis, loans granted to Togolese clients which remain unpaid (outstanding debts) fell in 2021, from 14.7 billion CFA francs to 12.5 billion CFA francs. They now represent only 5% of outstanding loans, compared to 8.3% in 2020.

With its 75 decentralized financial systems (DFS), Togo is one of the countries of the Union where the microfinance culture is the most deeply rooted. The country has the second largest number of microfinance institutions behind Senegal and ahead of Côte d'Ivoire, despite its small population. The sector's assets passed the CFA260 billion mark in 2020, making Togo WAMU’s fourth-largest actor, by assets, in the industry.

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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 .

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