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Togo

Togo

Population 7.3 million
GDP per capita 570 US$
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Synthesis

MAJOR MACRO ECONOMIC INDICATORS

  2014  2015  2016 (f) 2017 (f)
GDP growth (%) 5.4 5.3 5.0 5.2
Inflation (yearly average) (%) 0.2 1.8 2.1 2.5
Budget balance (% GDP) -4.8 -6.7 -6.3 -6.3
Current account balance (% GDP) -9.9 -7.0 -8.0 -8.2
Public debt (% GDP) 57.5 62.3 63.2 64.6

 

(e) Estimate   (f) Forecast

STRENGTHS

  • Phosphate-producing country
  • Growing port and airport traffic
  • Structural reforms under way (public finances, banking system, phosphate and cotton sectors)
  • Public and private investment in infrastructure

WEAKNESSES

  • Sharp socio-political tensions
  • Poor business climate
  • High levels of poverty and unemployment
  • Low productivity of agricultural sector
  • Underinvestment in terms of education and public health

RISK ASSESSMENT

Despite a slight dip, growth remains robust

Togolese growth is expected to dip slightly in 2017. Activity will continue to be sustained by the primary sector, as well as by services, which account for almost 50% of GDP. Services, mainly represented by transport and international trade, will, however, have to deal with competition from the ports of neighbouring countries. Public investment projects aimed at providing the country with infrastructure are also a key pillar of the economy. To do this, the authorities are planning massive investments in transport and energy infrastructure and to intensify social spending. Structural reforms relating to the energy and finance sectors are expected to sustain economic growth in the future.

The entry of the mining giants, Elenilto and Wengfu, into the Togolese phosphate market in late 2015 (Kpémé phosphate terminal) is in tune with the government's desire for a turnaround of the sector. By 2018, annual phosphate production is projected to total 3 million tonnes, providing a boost to manufacturing. The sector is, however, still dependent on phosphate prices, which although stable, remain modest.

The opening of the energy market to competition should improve the supply of electricity in a country where only 31% of the population have access to this resource. The Adjarala dam project and an invitation to tender for 3 photovoltaic power plants are part of plans to diversify the sources of electricity. More reliable access to energy will impact positively on the economy's key sectors (production of phosphates and their derivatives)

Inflation is expected to increase slightly in 2017, while nonetheless remaining moderate, reflecting the trend within the other WAEMU countries, because of the modest rise in food prices.

 

Persistent twin deficits

Electoral spending in 2015 greatly contributed to the deterioration of the budget deficit. After slightly consolidating in 2016, the fiscal deficit is expected to remain stable in 2017. This is because the 2017 budget act is centred on a rationale of balancing income and expenditure. Meanwhile, Togo, a member of the African Import Export Bank (Afreximbank) since May 2016, could in future benefit from its loans as a way of financing the country's infrastructure. Finally, the World Bank is expected to increase its financial commitment in 2017, which will relieve the strain on the public accounts. Finally, reforms regarding income and the management of expenditure will be implemented in order to stabilise the budget position in the medium term.

The current account deficit is likely to widen slightly in 2017 with the increase in the balance of trade deficit. Imports of consumer and capital goods needed for infrastructure projects will remain high, preventing a real deficit reduction. The primary income balance is likely to continue to run a deficit, chiefly because of dividend repatriation by foreign companies, while expatriate workers' remittances, subsidies from donors and FDIs are expected to continue to limit the current account deficit.

 

The president and his party have a firm grip on the reins of power and Togo remains an important link in the fight against terrorism

After being re-elected in the presidential elections held on 25 April 2015, President Faure Gnassingbé, in power since 2005, will continue to rule the country for a third term, which is expected to take him up to 2020. His position is likely to be reinforced by Togo's economic performance, as well as by improved relations with donors in recent years. He will also be able to count on the support of the armed forces, responsible for suppressing the opposition. The government is planning to implement a poverty reduction strategy by 2017, as well as a Strategy for Accelerated Growth intended to stimulate growth, employment and economic inclusion, to enhance governance and reduce regional inequalities.

Externally, Togo is expected to strengthen its relations with the other WAEMU members, as well as with the Economic Community of West African States (ECOWAS). The country is also keen to diversify its economic partners. In spring 2016, the President accordingly met the Chinese and German governments in connection with agreements on financing and developing the country. Meanwhile, the country is expected to continue to with its significant contribution to peacekeeping operations on the continent, especially in Mali.

Finally, despite some improvement in cross-border trade and in insolvency regulations, Togo's governance performance remains poor. The 2017 Doing Business Index ranks the country 154th out of 190 countries.

 

Last update : January 2017

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