Togo Economic Outlook
- Togo’s economy slowed to 5% growth in 2016 from 5.3% in 2015, due to lower government investment and less port activity.
- The government’s 2017-19 economic programme aims to reduce public debt from 76% of GDP in 2016 to 56.4% by 2021.
- The government is raising money for a 2016-18 industrial programme to boost agroindustry and set up an entrepreneur fund.
The economy grew by 5% in real terms in 2016, slightly down from 5.3% in 2015 because of lesser public investment and a shift of maritime traffic to other regional ports due to Togo’s strict application of West African Economic and Monetary Union (WAEMU) Regulation 14 on axle-load limits. Good rainfall in 2016 allowed agriculture to contribute 1.2 percentage points to overall growth, versus -1.5 points in 2015. The contribution of extractive industries was insignificant, with a negative growth contribution of phosphate production (-0.3 percentage points) and a weak one of clinker production (0.2 points). Despite several programmes to boost entrepreneurship, manufacturing contributed only 0.2 percentage points to GDP growth, down from 0.7 in 2015. Construction accounted for 0.5 percentage points of growth, also down from 0.8 the previous year. The services sector did no better, contributing 0.9 percentage points to overall growth, slightly down from 1.1 in 2015.
The government plans to step up talks with the International Monetary Fund (IMF) in 2017 and start reforms under the IMF’s Extended Credit Facility (ECF) in the hope of consolidating GDP growth, expected to be 5.1% in 2017. The primary sector is projected to account for 1.9 percentage points of growth, services 1.7 points and the secondary sector 0.9 points. Thus, in 2017, nonmarket branches are projected to account for -0.9 percentage points to GDP growth, while VAT revenue should account for 0.8 points and customs duties for 0.7 points.
Major public investment and steady growth marked the 2012-16 five-year periods, but government debt rose from 48.6% of GDP in 2011 to 76.0% in 2016, above the 70% WAEMU limit. The 2017-19 ECF programme aims for long-term viability of the debt. The EFC agreement stipulates that as from January 2017, the government is no longer to contract new non-concessional loans, while concessional loans are regulated and supervised. This new budget policy could reduce public debt to 56.4% of GDP in 2021.
The productive economy is dominated by agriculture. Of the active population, 51% are small farmers, 39% independent non-agricultural workers and 10% employed in the formal sector. In 2016, the formal sector comprised 88 000 jobs, 67% of which in the public sector and 33% in the private sector. Industry in 2016 accounted for only 19.7% of GDP, including 5.5% in manufacturing. Higher education provides few of the skills needed for entrepreneurship.