Population 6.304 million
GDP 3.624 US$ billion
@rating
country
Business climate
assessment
| 2010 | 2011 | 2012(e) | 2013(f) | |
|---|---|---|---|---|
|
GDP growth (%)
|
3.7 |
3.9 |
4.2 |
4.5 |
|
Inflation (yearly average) (%)
|
1.8 |
3.6 |
2.8 |
2.4 |
|
Budget balance (% GDP)
|
-1.6 |
-2.9 |
-4.6 |
-5 |
|
Current account balance (% GDP)
|
-7.2 |
-8.8 |
-13.5 |
-13.4 |
|
Public debt (% GDP)
|
32.3 |
28 |
27.2 |
27.8 |
| (e) Estimate (f) Forecast | ||||
STRENGTHS
- The world’s 4th largest phosphate producer
- Growing Chinese interest
- Debt cancellation under the HIPC initiative
WEAKNESSES
- Below-potential growth due to deficiencies of some key sectors
- Under-investment in education and public health
- Poverty rate above 60%
Risk assessment
Favourable growth prospects
The outlook for growth in 2013 remains favourable. Activity will be supported by further investment in infrastructures (roads, ports…), in the phosphate sector, the country’s main export product, and in cement production. A German company plans to invest $250 million over the period 2012-2015 in the creation of new cement works. This should make it possible to increase production and exports, as well as create new jobs. The recent connection to the global fibre optic network is also expected to impact positively on growth. Structural reforms are expected to continue in 2013 with the creation of single entity, the Togolese revenue authority, in charge of collecting taxes and customs duties, and the privatisation of inefficient state enterprises. The banking sector, as well as the cotton and phosphate sectors, will benefit from this restructuring process. However, the country, with agriculture representing over a third of GDP, remains dependent on the weather. Meanwhile, an intensification of the European crisis could result in slower growth, as the eurozone is a key market for the country. In a context of a downturn in the WAEMU (West African Economic and Monetary Union, which is closely linked to the Eurozone), the BCEAO (Central Bank of West African States) is expected to pursue an expansionary monetary policy. However, inflation is expected to slow slightly in 2013.
Fiscal and current account deficits
The current account deficit is expected to remain high, in particular due to the widening trade gap. Imports, which will be driven by strong domestic demand, will grow more rapidly than exports. However, increased production and the slight cotton price rise will stimulate cotton exports. Phosphate export revenues will climb because of new investments in the sector. Moreover, re-exports (which represent nearly a third of the total) will benefit from port infrastructure modernisation. Expatriate workers’ remittances, as well as official aid (including $29.3 million granted by the EU in December 2012 as part of a budget support facility) will continue to fuel the balance of transfers. Finally, the services balance will benefit from vigorous regional demand (transport, warehousing and communications; banking and insurance). The current account deficit will be covered by foreign direct investment as well as by concessional loans.
In 2010, the country benefited from substantial external debt relief under the highly indebted poor countries (HIPC) initiative. A total of $1.8 billion (56.6% of GDP) was cancelled. Meanwhile, between 2008 and 2011, the country was granted an Extended Credit Facility. However, the reforms begun under the programme have not all been completed (privatisation of inefficient state enterprises, improvement of the business environment). Togo is, therefore, expected to benefit from a new IMF arrangement in 2013. Finally, the budget deficit is expected to increase slightly due to the financing of additional investment in infrastructures and in the flourishing sectors.
Heightened political tensions
In March 2010, Faure Gnassingbé was re-elected as head of state for a second term. Following the elections, the main opposition party (UFC) split into two factions: those who recognised the results of the presidential election, and joined the coalition led by the presidential party, and the dissidents who created a new party, the National Alliance for Change (ANC). These political tensions enabled the president to strengthen his position. He then dissolved his party, the Togolese People’s Rally, and formed a new group, The Union for the Republic. Moreover, in June 2012, the government proposed the introduction of a measure to end the limitation of presidential mandates. These political developments, as well as popular discontent with the economic situation (low per capita income, high unemployment), are expected to result in more frequent demonstrations in 2013 by dissident groups like the Let’s Save Togo Collective, a grouping of human rights organisations and opposition parties (among them the ANC). Whatever happens, donors will be watchful for respect of opposition rights. Finally, the legislative elections, which were postponed after the prime minister’s resignation, are expected to be held in 2013. These elections will be a good test of each party’s popularity.
