Paving the Way to the Future (Part 2): Road Construction and Its Effects on Microfinance in Togo

By Kathrin Gerner, KF15, Togo

Check out Part 1 of this series Bad Roads, Transportation Costs and Microfinance in Togo to learn more about why new roads are essential for Togo and the Togolese economy.

Lomé is under construction. In fact, all of Togo is under construction. This is what I heard when I first arrived in this small West African country two weeks ago. And it did not take me very long to find out what that meant.

Impact on Daily Life

After I had checked into my room at the guesthouse, Madame Akossiwa, the housekeeper, showed me around. “There is no running water because of the road construction. You will have to take an African shower,” she said, pointing to a bucket. Later, Nils, my housemate and intern at the German embassy, told me that the water in our neighborhood had been on and off since January.

With construction projects spread all over Lomé, the water situation in my neighborhood is no exception. And there is no telling when the water will be back. The boulevard outside my house has been caught in an “almost finished” state since my arrival. With the majority of workers pulled off this project to work on “less finished” projects elsewhere in the city, it may be a long dry spell.

Impact on Drivers

“We need roads, but why start all of them at the same time? It’s a total mess,” one moto-taxi driver complains. Another driver adds, “It’s all the politicians’ fault. In Europe, this would never happen.” The frustration is understandable. After walking along Lomé’s ring road, Nils reports that only about one fourth of it is currently usable.

Most locals are convinced that the chaos is here to stay. Now that the rain season has started, work will have to stop frequently, and half-finished roads may get washed away. Pessimists believe that the construction will never be completed. The slightly more optimistic believe that it will take years.

Impact on Business and Borrowers

But road construction not only affects drivers. Many clients of WAGES, Kiva’s Togolese partner organization, are also feeling the impact.

Edith, the manager of the Agoé branch office of WAGES, tells me that the market of Agoé was completely flattened two months ago to give way to construction. Display tables and shelves that had not been hauled away in time were reduced to rubble. Vendors had to relocate and lost most of their customers, who could no longer find them. Those vendors who could not find a new place to set up shop joined the countless street vendors, balancing their entire inventory on their head while walking the streets.

Owners of larger stores and restaurants at the outer edges of the market stayed behind, but they are not faring much better. With the market gone, few shoppers now come to the area. Most business owners thought they could weather the difficult times, when they were told that work would be finished in three months. Two months into the project, however, everyone agrees that it will take much longer. Borrowers, who have been using their savings to make payments, will start to run out of reserves soon and many may have no chance but to default.

Edith says that the case of the market is no exception. Last year, construction was started on the main road through Agoé. Since the plans called for a wider road than the existing one, entire buildings had to yield to construction. Owners were given notice about two months before the demolition started. My careful question if there had been some kind of compensation is met with mild amusement. “No,” Edith shakes her head, “they were only given notice.”

Edith then goes on to tell me the story of Akuele, who took a FCFA 15 million (about $30,000) loan from WAGES to build a carwash with a small store in 2010. He poured concrete on his plot of land, constructed the carwash, and soon after, business was flourishing. But then notice arrived from the city that the carwash was in the way of the new road and would be demolished. Now the carwash is history. The loan, however, is not. And the profits from a few short months of operation cannot cover the payments. Only by diverting profits from his other businesses has Akuele been able to avoid default so far.

Most borrowers, however, do not have a backup. If their business is demolished, their only source of revenue, used to cover loan payments as well as daily expenses, is gone. “And the problem is even bigger than that,” Edith adds, “With the market gone and all these buildings destroyed or empty, there is a negative effect on the whole community.”

In spite of the difficulties with the current road construction projects, the prevailing opinion is that the projects will eventually improve the situation in Togo. Servais, my trusted moto-taxi driver, who skillfully maneuvers around big puddles and miniature lakes every morning to make sure I still look work-appropriate upon my arrival at WAGES, belongs to the group of eternal optimists. “Lomé will be a little Paris,” he says and smiles when I tell him that that may take a while.

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Check out Part 1 of this series Bad Roads, Transportation Costs and Microfinance in Togo to learn more about why new roads are essential for Togo and the Togolese economy.
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Kathrin Gerner is a Kiva Fellow (KF15) at WAGES in Lomé, Togo. She drafted this blog series while stuck at her house during a torrential downpour and uploaded it at a café a week later, having kept her balance during the crossing of several flooded streets by way of stepping-stones after yet another heavy rain. To find out more about WAGES, visit its Kiva partner page or the WAGES website. Or show your support by lending to one of its borrowers or joining the WAGES lending team!