Within the WAEMU, the financing needs of member states have increased sharply in recent years. Budget deficits, public investments, debt refinancing, and social spending are pushing governments to borrow more on the regional market.

This increase in the issuance of public securities facilitates the financing of national budgets, but it also produces a significant side effect on the private economy.

Commercial banks have limited resources. When faced with a choice between financing SMEs or purchasing government bonds, they often favor the latter. Government bonds offer attractive returns, better liquidity, and a perceived lower risk. They can also be used as collateral with the BCEAO (Central Bank of West African States) to obtain refinancing.

In this context, businesses find themselves in direct competition with governments for access to available financing. The more governments borrow, the more savings and bank liquidity are absorbed by public debt. Banks then have fewer resources to grant loans to the private sector.

This phenomenon is known as financial crowding out, meaning the crowding-out effect of public financing on the private sector. It is particularly visible in economies where financial markets remain underdeveloped and where banks play a dominant role in lending.

In the WAEMU, public securities issuance has reached record levels in recent years.

According to data from UMOA Titres, the states of the region raised more than 8,900 billion FCFA on the regional market in 2024. This strong demand for financing mobilized a significant portion of available banking resources.

SMEs are the first to be affected. They often have fewer guarantees, less structured accounts, and profiles considered riskier than large companies or public administrations. Banks therefore prefer to direct their liquidity towards sovereign bonds rather than towards more complex and costly credit applications.

This situation can slow productive investment, limit job creation, and hinder economic diversification. A company that cannot find financing postpones its projects, reduces its equipment purchases, or abandons its expansion plans. In the long term, this can weigh on growth.

Government funding remains essential, particularly for infrastructure, healthcare, and education. However, when public debt absorbs too large a share of available liquidity, the private sector eventually runs out of steam. One of the challenges for the coming years will therefore be to develop more alternative sources of financing for businesses, so that they are not solely dependent on banks.