Country Brief

Last updated September 2009

Overview

Togo is a low-income country located on the Gulf of Guinea in West Africa with a population of about 6.6 million with average per capita income of US$360 and gross national income of US$2.4 billion in 2007.  The country is a member of the West African Economic and Monetary Union (WAEMU).  The capital city, Lomé, sits on the coast near the border with Ghana and has about 800,000 inhabitants. Lomé also boasts the only deep-water port in West Africa, making the city an important transport hub for commerce to landlocked neighboring countries.

Shaped in a narrow band on an area of 56,785 km2, the country is divided into five regions and 30 prefectures.  The main economic activities are in agriculture, phosphate mining, and trade and transport of goods.  Agriculture employs two thirds of the population and accounts for about 45 percent of GDP.  The secondary sector, including phosphates, cement manufacturing, construction and energy, employs about 12 percent of the population and accounts for about 22 percent of GDP.  Services, dominated by commerce and transport, employ about 21 percent of the population and generate about 33 percent of GDP.

The Republic of Togo gained independence from France in 1960. The first President, Sylvanus Olympio, was assassinated in 1963 and was succeeded by a provisional government which was subsequently overthrown in 1967 by General Gnassingbe Eyadéma, who became President. Eyadéma ruled unchallenged until the early 1990s, when popular pressure forced the Government to hold a national conference to introduce democratic reforms. The conference degenerated into street riots followed by civil unrest and human rights violations, which led to political polarization.

Various elections were held between 1992 and June 2004 but these were boycotted by the opposition who questioned their integrity. The death of President Eyadéma in February 2005 followed by his son Faure Gnassingbe’s election to the presidency two months later triggered renewed civil unrest, prompting a military crackdown and an exodus of over 30,000 refugees to neighboring Ghana and Benin. Lengthy negotiations among the main political parties, also mediated by President Blaise Compaoré of Burkina Faso, culminated in a comprehensive political agreement (Accord Politique Global) in August 2006.  The agreement provided for a new transitional government of national unity which successfully organized legislative elections in October 2007.  Encouraged by this achievement and the new government’s reform platform, donors reengaged with Togo after more than 15 years of very limited development aid.

Basic facts

• From 4% in 2006, real GDP growth slowed to about 2% in 2007, 1.8% in 2008 and is projected at 2.4% in 2009.
• The inflation rate, after spiking in 2005 (6.8%) fell to 2.2% in 2006 and 1% in 2007. It peaked in 2008 at 8.4%, and is expected to revert to 2-3% in the medium-term as local food prices decline from their recent peak.
• Measured by the Human Development Index (2007) Togo is ranked 152 out of 177 countries.
• CPIA rating was 2.7 in 2008.
• Transparency International ranking (2007) is 143 out of 179 countries.
• Doing Business ranking (2009) is 163 out of 181 countries.
• According to a recent assessment of the MDGs, despite some progress, Togo is unlikely to achieve many of its Millennium Development Goals (MDGs) by 2015. In particular, it would be difficult to achieve the goals of halving extreme poverty and hunger, as well as those of access to improved water and sanitation and reduction of maternal and infant mortality.
• HIV/AIDS rate (population 15 years and above) was 3.3% in 2007.
• About 62% of the population lives below the national poverty line.

Recent political developments

Togo’s current government led by Prime Minister Gilbert Fossoun Houngbo (in post since September 2008) is reform-oriented and politically inclusive, with Ministers from extra-parliamentary opposition parties and civil society.  In February 2009, President Faure Gnassingbé issued a decree to create a permanent forum for dialogue and consultations, the CPDC (“Cadre Permanent de Dialogue et de Concertation”), which consists of the three political parties represented in the National Assembly and those who obtained at least five percent of the votes cast during the legislative elections.  The role of the CPDC is to help in preparation of the forthcoming presidential elections, expected to take place on February 28, 2010.  Upset with Government’s decision to bring in extra-parliamentary political parties, the main political parties -- the UFC (Union des Forces de Changement) and the CAR (Comité d’Action pour le Renouveau) -- have withdrawn from the discussions.  This situation has led to an impasse and the CPDC has not made any substantial progress.  However, the preparation of the polls is well underway: the electoral code was adopted by the Parliament; the electoral body is in place and its members have recently taken their oaths before the Parliament. 

In May 2009, the Government formed a Truth, Justice and Reconciliation Commission in a move to improve human rights.  The Commission is mandated by the President of the Republic to conduct a full examination of human rights abuses from 1959 to 2005, and produce recommendations for the future. 

Economic developments

Togo has not been badly affected by the global economic crisis to date, though downside risks remain.  The banking system was not directly affected and has far more serious problems of domestic origin.  A bank privatization process is under way and regional and international buyers seem to be interested in buying the main banks.  The most important export is cement and clinker which goes entirely to the regional market where demand remains strong.  The other free zone companies also export primarily to the region and their demand appears steady. The second largest export, phosphates, continues to enjoy prices significantly above the levels of 2-3 years ago such that the state-owned phosphates company is expected to be profitable again in 2009 in spite of serious internal problems.  The authorities appeared to have negotiated the renewal of the two mobile phone licenses at a price of approximately US$80 million to be paid this year, though recently the negotiations have broken down with the one private operator whose license is suspended since August 2009.  As this amount was not initially included in the 2009 budget, it will provide the government with some welcome flexibility, assuming the negotiations are successful.  On the other hand, there is evidence that remittances are falling, while a further rise in oil prices will create problems for the economy as it is totally dependent on imports.

Significant progress has been made in strengthening governance under the IMF- and IDA-supported programs during 2006-09. The Togolese authorities have implemented a wide range of reforms to improve transparency and accountability in the public sector, including in public financial management and in the financial, phosphates, cotton and energy sectors.

Development picture/donor coordination

After more than a decade with limited external assistance, Togo regularized its relations with key development partners after the October 2007 legislative elections. On May 29, 2008, The World Bank’s Board approved an exceptional IDA allocation of US$146 million to help clear all of Togo’s arrears, as well as US$17.6 million in budget support. The European Union, Togo’s largest donor, announced in late 2007 the full resumption of financial assistance after a 15-year suspension. On July 22, 2008, the Executive Board of the AfDB approved a grant to help clear Togo’s arrears under its new Fragile States Facility. On June 12, 2008, the Paris Club agreed to clear all of Togo’s arrears through debt cancellation and rescheduling, and to reschedule all debt service due over the next few years. Other bilateral and multilateral partners are also reengaging.  Togo has reached its decision point under the Heavily Indebted Poor Countries (HIPC) Initiative in November 2008.  Togo hopes to reach the HIPC Completion Point by end-2010. The Bank plans to  prepare a new CAS in 2010 to support PRSP priorities, and is also ready to help organize a Consultative Group in 2010 in support of PRSP priorities.

The World Bank Group's role

IDA suspended disbursements to Togo in January 2002 due to arrears and the Bank’s program became limited to support through small trust funds and analytical work, until May 2008. The largest program during this period has been the LICUS TF-funded community-driven Emergency Program for Poverty Reduction (EPPR). As a result of the satisfactory implementation of this program, the currently ongoing EPPR was extended to the remaining three regions under a new LICUS grant effective in January 2008 (US$1.4 million). The LICUS Trust Fund for Urban Infrastructure and Maintenance (US$1.5 million, effective in June 2008) pilots interventions to increase access to infrastructure and urban services in the capital city Lome, which would be scaled up by the recently approved Emergency Infrastructure Rehabilitation and Energy Project (US$26.82).  The LICUS Trust Fund for Economic Recovery and International Reengagement (US$1.6 million, signed in February 2008) complements the ERGG by supporting governance, procurement and strategic reviews of the coffee, cocoa, phosphates and energy sectors, as well as the financial sector. The Avian Influenza Control and Human Pandemic Preparedness and Response grant (US$0.6 million) for both animal and human health closed in June 2009.

The Bank reengaged with Togo following the clearance of IDA arrears, made possible by the Board’s approval of the Economic Recovery and Governance Grant and Board endorsement of a two year Interim Strategy on May 29, 2008.  Subsequently, a $17.2 million IDA Community Development Project was approved in June 2008 and a US$7 million additional financing from IDA in October 2008 as part of the Global Food Price Crisis Response.  The Bank’s reengagement followed Togo’s successful implementation of an IMF Staff-Monitored Program and the IMF Board approval of a three year SDR66 million PRGF arrangement on April 21. Three operations were approved in FY09: a Financial Sector and Governance Reform project, a second Development Policy Operation (ERGG-2), and an Emergency Infrastructure Rehabilitation and Energy Project. With other partners, the Bank has supported Togo to prepare its I-PRSP and has finalized a Development Policy Needs Review in 2008.  The Council of Ministers adopted the first PRSP on June 21, 2009.

IFC: IFC’s Strategy in Togo is to actively develop projects in sectors such as Health and Education, Agribusiness, Infrastructure, GMS, and Infrastructure; and to forge partnership with local banks to foster joint ventures aiming at supporting these projects with local currency financing, as well as developing micro and SME finance products to support the microfinance and SME sectors in Togo.  IFC is currently processing an investment in Contour Global, the IPP (independent power producer) that will increase electricity supply in Togo. In addition, IFC is considering an investment with a manufacturing company, and providing financing for the expansion of the Lome Port’s container handling facilities. IFC is also well aware that the Government of Togo is looking to finalize the allocation process of the third mobile license before the end of the year. IFC stands ready to mobilize its resources to insure that the deadline is met, but at the same time, it will also depend on the reactivity of the Togolese party.

MIGA: Presently, MIGA does not have any exposure resulting from investments in Togo.  However, during FY10, the Agency is working with a French investor to support a project in the services sector in Togo.

WBI: In Togo, WBI delivered a program on financial engineering of carbon projects.  In addition, activities were offered in the sub-region across many sectors and will also be available in FY10.

Contacts

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