Overview

Togo is a Sub-Saharan West African country that shares borders with Ghana to the west, Burkina Faso to the north, and Benin to the east. It has an estimated population of 7.3 million inhabitants, with a demographic growth rate of about 3%.

Political Context

Togo’s political landscape is dominated by the five following main parties, all of which have seats in the parliament: in early 2017, the presidential party, Union for the Republic (UNIR), had 62 seats; the National Alliance for Change (ANC) 19 seats; the Action Committee for Renewal (CAR) six seats; the Union of Forces for Change (UFC) three seats; and Sursaut National one seat.

On 25 April 2015, President Faure Gnassingbe was re-elected for a third five-year term. Jean-Pierre Fabre, the leading candidate of the opposition, obtained 35% of the vote. The new government, formed in June 2015, comprised 24 ministers and was led by a new Prime Minister, Komi Selom Klassou.

Economic Overview

Togo’s recent economic performance has been relatively robust: over the past three years, GDP growth has averaged approximately 5%, higher than most Sub-Saharan economies. While Togo has been subject to negative shocks, including the impact of the economic slowdown in Nigeria and lower commodity prices for its main exports, such as phosphates and clinker, at the same time the government has pursued an ambitious public investment program that—in 2015/16—helped sustain aggregate demand.

The main drivers of economic growth have been agricultural production and the extractive industries, as well as trading activities. Agricultural production, which accounts for approximately half of the country’s GDP and over 60% of its employment, benefitted from good climatic conditions. Inflation has remained under control, averaging 2.1% in 2016 thanks to a prudent monetary policy followed by the BCEAO and low food prices.

Togo’s external current account deficit remains substantial, however, as exports have declined as the result of lower demand by the country’s main trading partners, and income and service balances have improved over the past 12 months. The current account deficit was financed by a combination of aid, non-concessional borrowing, and Foreign Direct Investment (FDI) inflows.

The fiscal situation deteriorated sharply during 2015 and 2016, with the fiscal deficit growing from 5.8% of GDP in 2013 to over 9% during this period, while the central administration reported the accumulation of about FCFA 60 billion in arrears at the end of 2016, representing 2.5% of GDP. Concurrently, the public debt to GDP ratio grew rapidly to an estimated 77.4% of GDP, which is the highest in West Africa and greater than the threshold of 70% of GDP agreed to within WAEMU.

In early 2017, the government launched a new economic program anchored in a three-year agreement with the International Monetary Fund (to be approved in April 2017). The program is based on a severe cut to fiscal spending and increased efforts to mobilize public revenue in order to restore the fiscal space and reduce the country’s debt burden.

Last Updated: Apr 01, 2017

World Bank Group Engagement in Togo

The World Bank's second Interim Strategy Note (ISN-2) for Togo, which was approved in 2012, is aligned to three of the five pillars of the Accelerated Growth and Employment Creation Strategy (more commonly known by the French acronym SCAPE or Stratégie de Croissance Accélérée et de Promotion de l’Emploi). ISN-2 is outlined so as to strengthen economic recovery and promote sustainable development, improve economic governance and state capacity, and address poverty reduction and urgent social needs.

In 2016, the World Bank’s portfolio in Togo amounted to over $300 million and comprises 14 active projects. The World Bank Group is preparing a new Country Partnership Framework (CPF) for Togo for FY2017 to FY20. The overarching objective of the new CPF is to help pave the way to more inclusive and sustainable growth in Togo, led both by a more dynamic private sector and more effective government policies, public investments, and services. The Bank’s strategy places an emphasis on strengthening governance, institutions, and their accountability, as a prerequisite for promoting: (i) private sector performance and job creation, (ii) inclusive public service delivery, and (iii) environmental sustainability and resilience—the three focus areas of the CPF. These objectives integrate IDA18 thematic priorities, such as economic transformation and job creation, fragility, governance, gender equality, and climate change mitigation.

International Finance Corporation (IFC)

The IFC strategy in Togo is centered on projects in agribusiness, infrastructure, and manufacturing. It seeks to forge partnerships with local banks in order to foster joint ventures aimed at supporting these projects with local currency financing. The IFC is also developing financial products to support the microfinance sector and small and medium enterprises. It likewise supports the improvement of Togo’s investment climate improvement by providing technical assistance to the government for the implementation of reforms aimed at facilitating private investment.

The IFC’s total committed portfolio for Togo is around $138 million.

Togo’s business regulatory environment recorded improvements in the Bank’s Doing Business 2016 report (it was ranked 150th) compared to prior years’ rankings. The country has made starting a business easier by enabling a one-stop shop to publish notices of incorporation and eliminating a requirement for obtaining an economic operator’s card.

The government has initiated important reforms, including preparing a Doing Business roadmap, identifying key short term measures to improve Togo’s economic performance, revising and adopting of a new investment code to align it with international best practice, and introducing a new Free Zone law to strategically reposition the Free Zone.

Togo has also made progress in privatizing state activities, including an insurance company, two banks, hotels, power distribution, and port container-handling activities.

Last Updated: Apr 01, 2017

Social Context

Poverty remains widespread in Togo, although national poverty rates declined from 59% in 2011 to 55% in 2015. Poverty is mostly a rural phenomenon with 69% of rural households living below the poverty line in 2015. Female-headed households experience higher poverty rates than male-headed households (57.5% against 55% in 2015). Vulnerability is also higher among women as they have fewer economic opportunities and are underrepresented in high level decision making.

The education and health sectors represent a significant share of annual public spending, with an average of 14% and 7% allocated to the education and health sectors respectively from 2009 to 2014. More needs to be done to make sure that regional disparities in resource allocation are narrowed down and that the resources allocated to these two sectors are both increased and used in the most efficient and effective manner.

Development Challenges

Togo needs to put more effort into achieving Sustainable Development Goals (SDGs) given that the country was not able to achieve many of the Millennium Development Goals (MDGs). At the end of 2015, Togo had registered progress only in six of the eight MDGs—universal primary education and the control of HIV/AIDS.

Despite progress noted in the 2015 and 2016 Doing Business reports, the business climate remains challenging and effort is needed to scale up all ten indicators, namely: starting a business, dealing with construction permits, access to electricity, registering property, access to credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.

Overall, the key development challenges for Togo, as stated in the country’s poverty reduction strategy, include: (i) developing sectors with strong growth potential; (ii) strengthening economic infrastructure; (iii) developing human capital, social safety nets, and employment; (iv) strengthening governance; and (v) promoting a more balanced, participatory, and sustainable development.

Last Updated: Apr 01, 2017

Since donor re-engagement in 2007, external financial assistance has gradually increased. The European Union has increased its financial and technical support to the country, and the African Development Bank prepared and implemented a Country Strategy over the period 2011-2015 (a new AfDB strategy is currently under preparation and should be finalized by June 2016). Bilateral partners including France, Germany, the United States, and China are also increasing their support for Togo’s development. In order to channel this growing aid more effectively, sectorial aid coordination committees have been formed under a government initiative.

Last Updated: Apr 01, 2017


LENDING

Togo: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments