LOME, TOGO, September 8, 2020— This commercial district in the capital paid a high price for the curfew imposed by the government to curb the spread of the virus. At 7 p.m., bars, open-air restaurants, shops, and supermarkets lowered their shutters, giving this area traditionally known for its bustling nightlife the appearance of a ghost town. “We usually make most of our money in the evening and at night. The curfew is therefore causing us to lose a tremendous amount of revenue”, said Marc, the manager of an open-air restaurant along the boulevard.
Businesspersons are not the only ones affected by this situation. The entire Togolese economy is paralyzed, as indicated in the World Bank’s first Economic Update for Togo, published today. The report Boosting Private Investment to Achieve Higher Growth and More Jobs (F), stresses that the COVID-19 pandemic could wipe out four-fifths of Togo’s projected growth in 2020.
“We are seeing a decline in production and sales in a host of sectors, particularly in those where telework is not possible, such as manufacturing, retail trade, construction, and tourism. Roughly 62% of jobs are affected—49% in the service sector and 13% in the industrial sector”, said Urbain Thierry Yogo, Senior Economist at the World Bank in Togo and co-author of the report. “The number of employees at retail sale and leisure locations has declined by 30% and the number of persons going to their workplaces, by 12% relative to pre-COVID-19 pandemic levels.”
Small and medium enterprises have been particularly hard hit. According to the report, 41% of enterprises in the agricultural and agribusiness sector experienced a 75% to 100% decline in their sales, as did 33% of enterprises in the tourism sector, 36% in the manufacturing sector, and 35% in the transport and logistics sector.
“The analysis of the impact of the COVID-19 pandemic on the Togolese economy is based on two scenarios. One is an optimistic scenario of a short-lived health crisis, and the other, which is more likely, is a scenario in which the health crisis stretches beyond a nine-month period, in which case growth in 2020 could plummet to 1% in the best case scenario and the budget deficit could be 5.7% of GDP”, noted Urbain Thierry Yogo. The report recommends that the government provide greater financial assistance to the most vulnerable households and enterprises to stimulate economic recovery.
Boosting Private Investment and Accelerating Reforms
High taxation and difficulties in accessing financing are the main obstacles to private sector development. This perception stems from a high concentration of revenue derived from a small number of tax instruments and a limited number of taxpayers. Despite the dramatic increase in bank loans to finance investment in recent years, 51.3% of enterprises were still using their own funds to finance their investments in 2018.
The report also recommends the acceleration of measures aimed at boosting private investment and removing the obstacles to private sector development, particularly as the national development plan focuses on an annual increase in private investment of 17% between 2018 and 2022, compared to an increase in this investment of only 11% per year between 2010 and 2018. Continued efforts to improve the quality of infrastructure and services in the energy and telecommunications sectors are also critical.