This strategy is part of the process of disengagement of the state from the Togolese banking sector. It might include the following six points.
Analysis of strengths and weaknesses of the banking system of Togo
The banking sector has experienced through the 1980s, a flourishing condition. It was the major player in financing the national economy. The withdrawal of private partners for the benefit of the State compounded the difficulties due to the increased interference of politicians in the management of banks that found themselves with large bad debts on the state companies. This situation has prompted the state to inject substantial funds to save some banks. The current banking system finances partially the needs of the real economy, especially SMEs, agriculture, and housing.
The architecture of Togolese Banking System
Currently because of the lack of adequate legal tools the banks do not have a specific vocation. Therefore, each moves and finances different sectors. It is necessary to define the architecture of the banking sector according to the orientation of the development policy of the Government of Togo.
This is not to create new banks, but to reorganize the financial system of Togo in particular taking into account the real needs of the economy in priority some sectors namely, housing, agriculture, SMEs, and trade. In this context, we must consider a financial institution dedicated to SMEs, a bank of social housing which could be one of the existing banks to privatize and an agricultural bank that would use existing networks of micro-finance
The privatization of the banking sector in Togo
Privatization is valid and the process is running in Togo. But what, when and how privatize? It is not necessary to privatize the four banks involve. The privatization process should be completed in 2010.
Privatization could be achieved by calling to the public saving and shareholders households. Regarding the call to foreign shareholders it is important to have special attention to the qualities that should be required: financial solvency, adaptation to cultural and social environment and especially the needs of domestic economy.
Good governance of banks
The privatization of banks is one tool among many for a smooth financing of the economy. Indeed, there are private institutions, which may be in difficulty for lack of good governance. Therefore, an effective privatization of banks in Togo must necessarily be accompanied by the establishment of an adequate framework for good governance. It will place special emphasis on the quality of human resources.
Source: Adapted from author.
