Trade policies and practices by sector introduction

Financial services

1. Banking services

1. 
   Togo's banking sector comprises 10 authorized banks⁶⁵, and four financial institutions⁶⁶; six of these are semi-public companies included in the State's privatization programme (Table III.7). These institutions support industry in the formal sector, import-export transactions, and some private transactions (for example, the purchase of vehicles). Banking operations in Togo must comply with the WAEMU's common banking regulations and with the prudential provisions of the WAEMU's Banking Commission, which also monitors activities⁶⁷; nevertheless, according to the Togolese authorities, only three banks have positive net equity that enables them to comply with the rules in force. Requests for approval to establish a bank must be made to the Ministry of Finance, which verifies the details and whether or not they comply with the WAEMU's banking regulations.
   
2. 
   The 10 per cent tax on financial transactions (TAF) is imposed on the turnover of companies that provide financial services. According to the Banque de France, "for a number of years, the local financial system has suffered the impact of a difficult socio-political environment that has led to a deterioration in the financial situation and a large number of bad debts".⁶⁸ The authorities stress that Togo's banking system remains vulnerable and the majority of banks are under close surveillance by the Banking Commission, which explains the need to continue efforts to privatize them.
   
3. 
   Togo also has a flourishing micro-credit market, which is subject to national regulation under the aegis of the WAMU.⁶⁹ These are mainly mutual aid institutions, savings and loan cooperatives or decentralized financing schemes (SFD). These institutions had some 333,080 beneficiaries at the end of 2005; deposits amounted to CFAF 27,523 million in 2005 and outstanding loans to CFAF 22,136 million, an increase in comparison with 2004 (Table IV.7). The State endorsed a national micro-finance strategy on 25 May 2005 and the programme in support of the strategy on 6 June 2005.
   

1. 
   Since the first review of Togo's trade policy, micro-credit has developed rapidly, particularly outside the urban areas served by banking institutions, the main reason being the high level of savings (6 per cent of the banking system's assets in 1999). Micro-credit gives farmers and small and medium-sized enterprises access to loans (8 per cent of the banking system's loans in 1999).⁷⁰
   
2. 
   Within the WAEMU, the SFD are subject to common regulations approved by member States.⁷¹ In Togo, the SFD come under the Ministry of the Economy and Finance and 31 institutions have been authorized to engage in savings/loans, three received authorization for direct loans, and 11 are non-governmental organization welfare projects recognized as such.
   

1. Insurance services

   1. 
      Insurance services are provided by 10 companies, seven of which offer non-life insurance and three life insurance, with total capital of CFAF 6.7 billion.⁷² With the exception of Fidelia Assurances, all the other companies have foreign majority shareholdings. The Togolese State now only has 2.77 per cent of the capital of GTA-C2A-iard, which covered 41.3 per cent of the Togolese non-life insurance market in 2004. The companies freely determine insurance premiums, except for the automobile civil liability branch (mandatory since 1987), whose premiums are determined by the supervisory body following a proposal by the national insurance directorate. Overall, the regulated commitments of all life and non-life insurance companies amount to CFAF 22,978 million and CFAF 19,750 million respectively, corresponding to the value of the assets representing the counterpart of the regulated commitments; the authorities indicate that the regulated counterpart assets in the market are not sufficient.
      
   2. 
      Togo has signed the Inter-African Insurance Market (CIMA) treaty, in effect in the franc zone. The CIMA structure comprises a Council of Ministers, a Regional Commission for Insurance Supervision, and a General Secretariat.
      
   3. 
      Companies wishing to engage in insurance must obtain approval for insurance transactions in one or more branches of insurance. The same company may not, however, offer several branches so on the Togolese market all insurance companies specialize in either life or non-life insurance. Companies established in Togo may not cover risks outside the country. Likewise, risks in Togo may not be covered by companies not established in Togo. This type of cover may, however, be offered in the context of community joint insurance within the CIMA framework. The minimum capital required to set up an insurance company pursuant to the CIMA code is CFAF 500 million for public limited companies and CFAF 300 million for mutual insurance funds.
      
   4. 
      The Minister for the Economy, Finance and Privatization is responsible for approving insurance companies, after verifying whether the application meets the following criteria: the shareholders, the administrators and the directors of the company have the capacity to administer and manage the company to be set up; the viability of the business plan taking into account the financial estimates, the investment programme and the estimated financial situation; the general situation in the market.
      
   5. 
      The 10 per cent TAF applies to the turnover of companies supplying financial services, including insurance.
      

Economic Mission of the French Embassy in Benin (2004), Le secteur de l’énergie électrique au Bénin et au Togo (The electric energy sector in Benin and Togo). Available online in French at http://www.missioneco.org [12 March 2005].