In the WAEMU, banks are devoting an increasing share of their resources to financing governments. Treasury bonds and bills offer regular returns, relatively short maturities, and a perceived low risk. For banks, these securities often represent a simpler and more profitable investment than financing private companies. This situation facilitates government budget financing but also reduces the credit available to small and medium-sized enterprises.

 

The regional market for government securities has grown significantly in recent years. According to data from the UMOA Securities Agency, annual issuances now exceed several trillion CFA francs, with strong participation from commercial banks. Government bonds often offer yields between 6% and 8%, which remains attractive in an environment where alternative investments are limited. Furthermore, banks can use these securities as collateral with the BCEAO (Central Bank of West African States) to obtain refinancing, further enhancing their appeal.

 

Conversely, financing SMEs is considered riskier. Many businesses have limited collateral, incomplete accounting records, or irregular income. Banks must therefore dedicate more time to analyzing applications and monitoring repayments. Default rates are also higher in this segment, increasing the cost of credit. Under these circumstances, buying a government bond often appears simpler than financing a small business.

 

This preference of banks for government bonds has consequences for the real economy. SMEs, however, represent a significant share of employment and economic activity in the region. In Senegal, they constitute the core of the business fabric, yet they continue to face difficulties accessing financing. The amounts granted often remain insufficient, interest rates high, and the required guarantees difficult to provide. A significant number of businesses are therefore forced to resort to self-financing or informal channels.

 

This phenomenon is sometimes described as a crowding-out effect. The more states borrow on the regional market, the more banks direct their liquidity towards government bonds. Credit to the private sector then grows more slowly, particularly for the most vulnerable businesses. This situation can hinder productive investment, limit job creation, and slow economic diversification.

 

The goal is not to call into question state funding, which remains necessary to cover budgetary needs and finance infrastructure. However, to better support businesses, it is becoming important to develop other sources of financing, such as investment funds, public guarantees, microfinance, and regional financial markets. As long as government bonds remain more attractive to banks than SMEs, access to credit will continue to be one of the main obstacles to private sector development.