Togo enjoyed a notable achievement in 2019. The west African country of 8 million people recorded the highest growth in greenfield project announcements across the whole of Africa, according to investment monitor fDi Markets.  

Togo has also worked hard to boost its investment attractiveness through its significant efforts with regards to business reform. It jumped the highest number of places of any country globally in the World Bank’s 2020 Doing Business report, climbing to 97th out of 190 countries. Since 2010, it has risen 68 places.

Advertisement

“The good economic achievements that we have observed in recent years are the result of a government that has been reform-oriented,” says the World Bank.

Three-pillar plan

This focus on reform by the government of president Faure Gnassingbé is evident in Togo’s ambitious national development plan (PND) 2018-22. With ambitious targets aligned to the UN’s Sustainable Development Goals, including the creation of 500,000 jobs, the PND is a blueprint for Togo’s future. It aims to structurally transform the Togolese economy to promote inclusive and sustainable growth.

“The PND’s objective is to create jobs and generate revenue [on a huge scale], which will in turn allow the government to increase its support to the most vulnerable segments of the population,” says Sandra Ablamba Johnson, delegate minister in Togo’s presidential unit dedicated to improving the country's business climate.

Focusing across three strategic pillars, the PND is estimated to cost about $8bn, of which the government hopes up to 65% will be funded by the private sector. The first pillar aims to expand business and logistics infrastructure around the capital, Lomé, which has an international airport and west Africa’s only natural deep-water seaport.

The PND’s second pillar outlines a roadmap for the industrialisation of Togo’s economy. With a focus on the agricultural sector, it lays out plans to set up Togo’s first industrial park and 10 agricultural growth poles, or agropoles, across the country.

The third pillar underpins Togo’s ambitions to promote social and economic inclusion throughout the country. Critical to this is the government’s drive to digitalise the economy and electrify rural areas through renewable energy projects.

Progress has been made since launch, with investment coming in across the PND’s strategic axes. Togo still has some way to go, however. Despite improving its human development index value by 26.6% between 1990 and 2018, it is still rated as a low-income country.

FDI boost

“Whether in agriculture, infrastructure or digital technology, the role of FDI is crucial and Togo is determined to make every effort to attract it,” says Shegun Adjadi Bakari, senior adviser to Mr Gnassingbé.  

Compared with just two project announcements in 2018, 11 greenfield FDI projects were announced in Togo in 2019, according to fDi Markets. 

Notably, in November 2019, Nigerian conglomerate Dangote Group announced plans to invest $2bn to establish a new phosphate fertiliser-processing facility in Togo. The mega-project was the second largest greenfield investment announced in Africa in 2019 and is expected to create at least 500 jobs.

Dangote Group hopes to tap into Togo’s significant phosphate reserves, which are estimated to be 60 metric tonnes, and position itself as west Africa’s main supplier of fertiliser. “Within the context of Dangote Group’s investment in the phosphate industry, Togo’s ultimate goal is to improve farmers’ incomes by providing them with sufficient quantities of fertiliser at a lower cost; 50% of the cost of fertilisers in west Africa is linked to logistics,” says Mr Adjadi Bakari.

Building success

Dangote, which has business interests ranging from sugar to oil and gas, also announced plans to set up a cement facility in Lomé. The building materials sector has been the second most popular sector for foreign investors in Togo, with seven projects announced since 2012, according to fDi Markets.

Most greenfield FDI has been in the financial services sector, with eight projects announced in Togo since 2013. Several banks are headquartered in Lomé, including the West African Development Bank, pan-African Ecobank, and EBID, the multilateral bank of the Economic Community of West African States (a trading bloc of which Togo is a part).

Togo was awarded a B rating with a 'stable' outlook for the first time in June 2019 by S&P. The country’s debt-to-GDP ratio has fallen since its 81.4% peak in 2016, but remained high in 2019 at 72.6%.

Togo’s headline FDI inflows, which include both greenfield investment and crossborder M&A, have been volatile over recent years, however. Despite rising since recording FDI inflows of -$46m in 2016, to $88m in 2017 and $102m in 2018, Togo has not come close to the record $711m of FDI inflows garnered in 2011. 

Better for business  

Nonetheless, Togo has made significant reform efforts in the areas of starting a business, registering property and getting credit, according to the World Bank. Compared with a decade ago, when it took 84 days, starting a business in Togo now takes roughly two days, while the costs of getting a building permit or electricity connection are now one-third of what they once were.

“Togo has one of the most efficient and fastest systems in Africa to start a company with a paper-based system,” says the World Bank.

Policies such as extending the hours of the business registry to run non-stop from to 7:30am to 6pm have also made starting a business easier. “That’s the type of organisation that made it more efficient – entrepreneurs submit their application in the morning and receive all their approved documents in the afternoon,” says the World Bank.

Some 11,482 new businesses were registered in Togo in 2019, an increase of 9% compared with 2018, according to Togo’s Centre for Business Formalities. Female entrepreneurs have also taken advantage of the friendly regulatory climate, making up about 26% of new business owners, compared with 13% in 2015.

Despite an efficient paper-based system, there are several areas of the investment climate in Togo that could go online, such as paying taxes, according to the World Bank. “Most companies do it on paper, and if there were a very efficient system to file your taxes and pay your taxes, it would save time for entrepreneurs," it says.

While business reforms have boosted Togo’s attractiveness, the rankings should be taken lightly, since countries can easily influence certain components to improve their score. “The Doing Business ranking does not adequately capture the implementation and effect of policy and regulation changes,” says Oliver Morrissey, professor of development economics at the UK’s University of Nottingham.

Reality check? 

Protests swept across Togo in 2017 and 2018, as its citizens called for a two-term limit for presidents and reform of the national electoral commission. In 2005, Mr Gnassingbé succeeded his father, who had previously ruled the country for 38 years. 

His fourth consecutive electoral victory in February 2020 – which the opposition contested after raising claims of fraud – is likely to mean a continuation of Togo’s coordinated reform agenda and perhaps further concomitant FDI attraction.

Political and reform continuity will be under pressure to deliver on promises to improve the lives of the Togolese, however. Despite recent achievements, more than half of the population still lives in extreme poverty (defined by the World Bank as living on less than $1.90 a day); for the country’s rural majority, the proportion rises to 69% (as of 2015). Overall, Togo is the 12th poorest country in the world, according to the IMF.

Before the outbreak of the coronavirus, foreign investors were showing continued interest in Togo. In January and February 2020, an additional four greenfield FDI projects were announced in the west African country, according to preliminary figures from fDi Markets. 

However, as international commerce has stalled following the global pandemic, the country’s plans to become a regional transport hub are likely to be temporarily shelved. Mr Gnassingbé announced a three-month national state of emergency on April 1, which included an imposed curfew between 7pm and 6am, promises of free water and electricity for three months and a CFA Fr400bn ($658.6m) business solidarity fund. On April 3, the IMF announced the disbursement of $131.3m to assist Togo during the crisis.