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Togo's economy continues its growth trend despite the pandemic

The African nation's minister for investment promotion explained the country's current trade and economic scenario in an interview with Oxford Business Group
Togo

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Kayi Mivedor, Togo's Minister of Investment Promotion, spoke to Oxford Business Group about opportunities for investors as the Togolese country streamlines trade procedures and develops new infrastructure to continue on the path of national development.

How would you assess the current economic situation in Togo, particularly in the midst of the COVID-19 pandemic?

Togo's economy has been strong and resilient during the COVID-19 pandemic. The economy has continued its solid growth trajectory despite logistical and healthcare challenges. While some West African countries recorded negative economic growth in 2020, Togo's GDP expanded by 1.8%. Although this is a sharp drop compared to annual growth of more than 5% over the past five years, the IMF and other international groups praised Togo's performance. Moreover, Togo has continued to attract foreign direct investment during the pandemic due to a steadily improving business climate, which is the result of five years of aggressive reforms and strong government commitment. 

For example, it is now possible to establish a company in four hours online with all required documents in place. Land regulations have been simplified and the transfer of ownership is faster. In addition, several financial reforms have stimulated the business environment. As a result, Togo was one of the 10 most improved countries in the World Bank's 2020 Ease of Doing Business Index, moving up 40 places after making it easier to start a business, obtain building permits, pay taxes, access credit and register property. This progress began in 2019, when Togo moved up 19 places in the index. The performance achieved in 2020 made Togo the top reformer in Africa and the third globally.

GDP growth of 4.8% is expected by 2021, and the average target for the next five years is 7%, reflecting the effects of planned infrastructure projects and related directives. This growth is based on the active participation of the private sector, foreign investors and the restoration of confidence in the regional economy in general.

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To what extent did the health crisis undermine the stability of the financial system?

During the crisis, the Central Bank of West African States took measures to support the regional economy; provide liquidity to areas in need; and ensure that refinancing, restructuring and business support were readily available. Despite the slowdown in demand caused by blockades, movement restrictions and trade challenges, particularly prevalent in the airline industry and the tourism sector, financial services proved resilient and responsive to the downturn in consumption. The government has taken appropriate measures to support the financial system and weaker enterprises in order to maintain a stable level of production and provide financial facilities to enterprises in need.

Several anchor projects have been implemented despite the economic disruption caused by the pandemic. These projects should build the ecosystem for small and medium enterprises (SMEs) and propel the economy forward. The Adetikopé Industrial Platform (Plateforme Industrielle d'Adetikopé, PIA), which was launched in June 2021, will revitalise SMEs in the surrounding area and provide a number of opportunities for foreign investors seeking exposure to the Togolese economy and the wider ECOWAS market.

Certain projects were conceived and completed during the crisis despite logistical and supply chain challenges. For example, the region's first data centre was inaugurated in Togo in June 2021. The data centre will stimulate the national economy by improving connection speeds, creating jobs, providing new services and generating alternative sources of income.

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What role will special economic zones (SEZs) play in Togo's future?

SEZs are catalysts for industrialisation in Togo and a key part of the country's economic recovery. Togo has already experimented with free zones and SEZs in terms of job creation, and the government understands the importance of creating spaces where SMEs can expand their operations, gain access to capital and grow. The manufacturing sector, and the textile sector in particular, is poised to take advantage of SEZs. 

The PIA hosts a multi-disciplinary zone that serves the industrial and logistics sectors, providing entry points to inland countries such as Burkina Faso, Mali and Niger, and offers a one-stop shop for companies to set up operations in a business-friendly environment. Operationally, the PIA acts as a single point of access to facilitate business transactions and handle queries. Together, these features mean lower production costs for companies operating out of Togo, as well as a competitive advantage vis-à-vis international players.

In terms of job creation, the leading economic segment is the textile industry. We expect 15,200 new jobs from the first companies located in the IPA, which will increase to 30,000 in the years up to 2026. While cotton is the most important product in terms of value added and job creation, soybeans and organic soybeans are on the rise as the next niche markets.

In terms of energy availability and cost, the energy mix is maturing to include more green sources and achieve a 50:50 mix of renewable and non-renewable energy. We are increasing power capacity to 100 MW in the surrounding area through the Blitta solar power plant, which currently has 50 MW of clean energy capacity. The quality of Togo's energy is high and the relevant cost for neighbouring countries is competitive. One of the fundamental principles of SEZs is job creation, and efforts are being made to improve the energy infrastructure to maintain Togo's attractiveness in the region and help achieve this goal.