Regional financial market: 90% of state debt, held by commercial banks

Regional financial market: 90% of state debt, held by commercial banks
Regional financial market: 90% of state debt, held by commercial banks

(Togo First) –

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The securities market of Umoa (West African Monetary Union), where the countries of the sub-region regularly issue bonds to obtain cash, is very largely dominated by commercial banks. As buyers, these players represent around 90% of the securities on this market, which weighs around 13,600 billion FCFA (particularly in OAT, BAT and syndicated securities). According to an evaluation by the Umoa-titres agency covering the year 2019, for Togo, the number 1 position went to Coris Bank, followed in order, Bank of Africa, Ecobank, then Orabank, then the Union Togolaise Bank (UTB) which closes the select group of the best SVT (specialists in Treasury securities) contributors.

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The information comes from a panel of experts discussing the issue, as part of the 3rd edition of the UEMOA Zone Public Securities Market Meetings (REMTP 2021) at the initiative of the Umoa-Titres agency, specialized in the promotion of public securities within the community space.

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The works, online, opened yesterday.

Thus, at the end of December 2020, only 8.63% of the securities were held by local investors (Insurance company, UCITS, Pension funds, etc.), according to Abdoulaye Karamoko, Senior Portfolio Manager at Enko Capital, exponent, the structure of the government securities market and the weight of institutions. Of this portion, UCITS (Collective Investment Collective in Securities), for example, only represent a little more than a third of the weight of local institutions, with 720 billion FCFA under management at the end of 2020, or barely 5% of the total. global market.

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Representation is even less when it comes to offshore institutions, which manage only 100 billion FCFA, or 0.75% in this market. These are mainly, Offshore Banks and other Brokers, Family Offices, or even a few rare Hedge Funds.

For experts, this under-representation of institutions is explained in particular by a sub-regional regulatory context which would limit the scope of action of certain players, the structuring of pension systems, which limits interest in financial markets, or a more limited offer from banks and SGI (intermediation companies).

Moreover, the reflections of this panel of market specialists explore the possibility of market reforms, in order to be able to invite more insurers and pension funds. These latter types of players make it possible in particular to support longer-term loans (over 10 or 20 years), unlike shorter maturities, as currently observed on the market.

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The objective, in the long term, would be to achieve a presence of 35% of these institutional actors, in a context marked by economies still very little financialized in the sub-region.

Ayi Renaud Dossavi

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Umoa-Titres: Togo mobilizes CFAF 27.5 billion for its first in 2021

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