Reviving Togo's economy

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Developing a coherent trade strategy

With regard to trade policy, the report reveals a dramatic shift in the structure of exports following the decline of the phosphate and cotton sectors. Cement and clinker have become the country's main export products (35 per cent to 40 per cent of exports), with exports increasingly destined for ECOWAS countries (68 per cent to 70 per cent of total). Imports have not changed as much, but China’s position as the country of origin has been considerably strengthened (from three per cent of imports in 2000 to 16 per cent in 2007). It is noted that the trade policy is largely determined by regional agreements, but the report recommends strengthening the analytical contribution during negotiations in order to better defend legitimate interests. In order to lift constraints relating to the development of trade and trade policy (weak technical capacity, unavailability of reliable and timely information, instability of the institutional framework), the report recommends development of a coherent trade strategy that focuses resources on the main priorities. In addition, a rational approach to fostering investment and exports is also proposed to avoid discrimination against businesses outside of the free zone.

The DTIS also focuses on trade facilitation, transit and re-export trade, and on the Togolese free zone. It notes, for example, that the excessive trade-related costs and delays are due mainly to the failure to apply regional transit agreements, as well as delays and surcharges caused by customs and escort services. Furthermore, the customs clearance procedure consists of too many steps and gives rise to unofficial and unwarranted payments.

Owing to its geographic position and deep-water port, Togo provides storage services to neighboring countries. Import/export traffic destined for other countries (transit and re-export) provides value added estimated at 10 per cent of GDP, with the greatest portion coming from the re-exportation of used vehicles.

 

Repositioning the Free Zone and promoting labour-intensive export

The total production of the 60 businesses established in the Togolese free zone was valued at around US$300 million in 2008, and exports in that year amounted to US$260 million. Although subject to various kinds of disputes (exploitation of the labour force, businesses that close at the end of the tax holiday, among other grievances), the report reveals that the minimum wage is generally higher than that of the national market and that the number of jobs created (over 9,000 full-time jobs) accounts for a significant portion of employment in the formal private sector. However, a repositioning of the free zone is viewed as necessary in order to promote labour-intensive export targeting overseas markets. The report also stresses the importance of a stable tax regime that should reassure investors.

 

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