Report No: 38146 -tg


Products Offered by Banks in Togo



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Products Offered by Banks in Togo





  1. Banks in Togo primarily offered loan and deposit services to their clients. Both bank deposits and credits in Togo saw a remarkable increase between end December 2000 and end September 2005. However total deposits rose faster than total credits (Figure 2.1).


Figure 2.1:Evolution of Bank Deposits Vs. Bank Credits, 2000-2005

Source: BCEAO





  1. Private sector nominal deposit growth (61.5 percent between December 2000 and September 2005) was the main factor behind the rise in total deposits. While public enterprises deposits rose faster, a 169 percent jump over the period 2000-2005, they represented only a small proportion of total deposits. Thus, at end December 2004, private sector deposits accounted for 87.3 percent of the total deposits, public enterprises held 7 percent of all deposits, and Government held 9 percent (Figure A. 2.1 in Annex 2).




  1. The growth in bank credit in Togo between 2000 and 2005 was primarily fueled by a 22.9 percent increase of credit to the economy, including public enterprises (Figure A.2.2 in Annex 2).


Credits and Deposits are Mainly Short Term


  1. Almost three-quarter of the amount of bank credit outstanding was of short term nature in September 2005 (Table A.2.2 in Annex 2). Three banks (SIAB, FBT and BTD) departed, however, from the general pattern. BTD had a predominance of medium term loans (81.2 percent) in its portfolio because it provided primarily small equipment loans to individuals. Medium term loans at FBT represented 68.8 percent of its portfolio because of a claim on Government resulting from the restructuring of the bank, as discussed later in the report. Without this claim on Government of CFAF 2.7 billion, the distribution of loans between short and medium term would have been 75 and 25 percent respectively at FBT.




  1. From these figures, it can be inferred that either banks in Togo did not finance investment expenditures of firms or they financed these expenditures with short term credit which could have a negative impact on the firms’ financial structure.




  1. To a large extent, short term credits are favored by banks because of the absence of longer term resources. Close to 80 percent of bank deposits were short term in nature at end September 2005 (Table A.2.3 in Annex 2). They were either sight deposits or savings deposits, both of which were redeemable on demand. Banks in Togo did not raise funds on the financial market. Any savings deposit with maturity between 7 days and over five years qualifies for term deposit. However, the prominence of relatively short maturity for term deposits at banks could reinforce the incentive to favor short term credits.




  1. Only two banks (FBT and BTD) had longer term resources representing more than 30 percent of their total deposits base. For FBT, this was the result of negotiations with insurance companies to balance its medium term loan made to Government. However, those term resources were insufficient to fully cover its medium term credits.


Bank Clientele in Togo


  1. Bank customers in Togo include a diverse mix of clients from private to public firms as well as individuals. At the end of September 2005, the majority of bank deposits (47 percent) originated from private firms and 35 percent from individuals (Table A.2.4 in Annex 2). These resources were mainly used for loans to private sector firms (54 percent of the loan portfolio). Loans to public enterprises and individuals accounted respectively for 35 percent and 9 percent of the total bank loan portfolio.




  1. However, major differences existed among public and private banks. The largest public banks lent primarily to public enterprises. Thus, over 58 percent of BTCI loans were outstanding to public enterprises, mainly SOTOCO, the state cotton company. UTB was also a major lender to public enterprises, in particular to OTP, the state-owned phosphate company.




  1. Among the banks that focused their lending activity to private firms are BIA (92.6 percent) and Ecobank (88.3 percent). SIAB concentrated its loan activity mainly on individuals which accounted for 58.4 percent of its loan portfolio. It is worth noting that Ecobank had a large proportion of its assets in interbank loans (48.4 percent or CFAF 39 billion) which were not included in the loan figure of Table A.2.4. These were mainly loans outstanding to other members of the group in the context of spreading the risk on large credits.




  1. Other institutions such as BTD and CET also lent primarily to individuals. Sixty five percent of loans at BTD were consumer loans as well as a few housing loans which did not exceed CFAF 2 billion and had a maximum term to maturity of 10 years. CET had a very diffuse clientele made up mostly of individuals.




  1. Bank deposits came primarily from private sector firms and individuals even for banks such as BTCI which lent primarily to public enterprises. At BTCI, public enterprise and government deposits accounted for 26.8 of total deposits compared to 72.8 percent held by the private sector.


Distribution of Bank Deposits and Credits


  1. The distribution of deposits by size for banks for which information is available, shows that there were a large number of small deposits which accounted for, however, a small share of total deposits (Table A.2.5 in Annex 2). While between 54 and 90 percent of the number of deposit accounts were those with an amount less than CFAF 200,000 (US$400), they represented only between 1 and 4 percent of total deposit amounts.




  1. With 90.9 percent of its total deposits held in accounts of less that CFAF 200,000 (US$400), SIAB appeared to cater more to small depositors compared to other banks. The same focus on small depositors appeared to be true for CET and BDT, although that could not be verified with available data.




  1. A comparison of credits and deposits of clients at BTCI13 shows that small depositors held 54.5 percent of all deposits accounts, while they benefited from only 39.7 percent of the number of total loans (Table A.2.6 in Annex 2). This underscores a lending bias towards larger customers.




  1. Several banks are, however, making an effort to reach poorer customers as well as small and medium enterprises (SMEs). Information collected from a survey questionnaire submitted to banks showed that Ecobank had a non negligible amount of loans outstanding to SMEs. At BTD, SMEs could also access different types of financing. FBT had a lending program for SMEs based on the following: (i) Medium sized firm with volume of business between CFAF 1 billion and CFAF 3 billion could receive credit up to CFAF 100 million for a maximum maturity of 3 years at 11.5 percent annual interest rate; (ii) Small firms with a volume of business between CFAF 100 million and CFAF 1 billion could get up to CFAF 50 million loan amount for up to two years at a 12 percent annual interest rate; and (iii) Very small firms with a volume of business less than CFAF 100 million could receive CFAF 10 million in loans for up to 18 months at a 14 percent annual interest rate. While these loan terms appear to favor access to SMEs, the enterprises were still required to provide balance sheets for the past three years, estimated financial statements for the next two years and a minimum guarantee contribution of 30 percent of the amount of the project being financed.



  1. Some banks were also offering refinancing to microfinance institutions. Both Ecobank and BTD had lines of credit to WAGES, FUCEC. The Financial Group has microfinance subsidiaries in Benin and Chad but not in Togo. However, FBT intends to diversify into the micro finance field in the medium term.




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