Economy of Togo

The economy of Togo has struggled greatly. The International Monetary Fund (IMF) ranks it as the tenth poorest country in the world,with development undercut by political instability, lowered commodity prices, and external debts. While industry and services play a role, the economy is dependent on subsistence agriculture, with industrialization and regional banking suffering major setbacks.In January 2017, the IMF signed an Extended Credit Facility arrangement, consisting of a three-year $238 million loan package. Progress depends on follow through on privatization, increased transparency in government financial operations, progress toward legislative elections, and continued support from foreign donors.

Top Sectors in Togo

Agriculture in Togo

The majority of the Togolese population depends on subsistence agriculture. Its agricultural products includes coffee, cocoa, cotton, yams, cassava (tapioca), corn, beans, rice, pearl millet, sorghum and livestock such as fish. Food and cash crop production employs the majority of the labor force and contributes about 42% to the gross domestic product (GDP). Coffee and cocoa are traditionally the major cash crops for export, but cotton cultivation increased rapidly in the 1990s, with 173,000 metric tons produced in 1999. After a disastrous harvest in 2001 (113,000 metric tons), cash crops production rebounded to 168,000 metric tons in 2002. Despite insufficient rainfall in some areas, the Togolese Government has achieved its goal of self-sufficiency in food crops maize, cassava, yams, sorghum, pearl millet, and groundnut. Small and medium-sized farms produce most of the food crop; the average farm size is one to three hectares.

Mining in Togo

In the industrial sector, phosphates are Togo's most important commodity, and the country has an estimated 60 million metric tons of phosphate reserves. From a high point of 2.7 million tons in 1997, production dropped to approximately 1.1 million tons in 2002. The fall in production is partly the result of the depletion of easily accessible deposits and the lack of funds for new investment. The formerly state-run company SociÃ©tÃ© Nouvelle des Phosphates du Togo (New Phosphate Company of Togo) appears to have benefited from private management, which took over in 2001. Togo also has substantial limestone and marble deposits.

Togo - Key Economic Indicators

Exports & Imports

Togo's main exports are gold, refined petroleum, calcium phosphates, soybeans, and electricity. It imports a wider range of goods, including machinery, vehicles, fuels, and food products. Recent data suggests strong export growth, with leading exports like natural calcium phosphates reaching $280 million in 2023 [TrendEconomy]. However, Togo generally runs a trade deficit, meaning it imports more than it exports.

Balance of Trade

As mentioned above, Togo has a negative trade balance. In 2023, the total export value was $1,079 million, while imports reached $2,863 million, resulting in a deficit of nearly $1.8 billion.

Infrastructure Development

The government is investing in infrastructure development, particularly roads. Recent projects include expanding the national highway network and improving rural access. However, Togo still faces challenges in maintaining its existing 11,000 kilometers of roads and expanding them further

Fiscal Policy

The Togolese government is focused on increasing public spending to support economic growth and social development. This can be achieved by raising taxes or borrowing money. Recent data indicates a focus on improving tax collection efficiency to generate more government revenue.

Monetary Policy

Togo's monetary policy is primarily determined by the Central Bank of West African States (BCEAO). The BCEAO focuses on controlling inflation and maintaining regional financial stability. Their most recent interest rate decision was in March 2024 .

Trade Agreements

Togo is a member of several regional trade agreements, such as the Economic Community of West African States (ECOWAS). These agreements aim to facilitate trade between member countries by reducing tariffs and other barriers. A recent development is the implementation of a common external tariff within ECOWAS, further promoting regional trade integration .

Environmental Regulations

Togo has established environmental regulations to address issues like deforestation, pollution, and waste management. However, enforcing these regulations can be challenging due to limited resources and competing economic priorities. Recent efforts include a national strategy for plastic waste management launched in 2023.

Tax System in Togo

Capital gains tax: Togo applies a capital gains tax of 2.5% on profits exceeding a certain threshold.
Corporate tax rate: The standard corporate tax rate in Togo remains at 27%, following the reduction from 28% implemented in 2019.
Sales tax (VAT): Togo levies a Value Added Tax (VAT) of 18% on most goods and services.However, the specific sectors enjoying a reduced rate of 10% (accommodation, catering, specific tourism services) may be subject to revisions, so consulting a tax professional is advisable.
Property tax: Property tax in Togo still varies depending on location and the type of property. It's typically levied on the rental value of the real estate.
Payroll tax: Togo's payroll tax system remains in effect. Employers contribute 3% of gross salaries, while employees contribute 4% for social security purposes.
Tax deductions and credits: Togo offers tax deductions and credits for certain expenses, investments, and social contributions. However, specific details on these exemptions and incentives are likely to change.
Tax compliance: Tax compliance in Togo is considered to be improving, with the Togo Revenue Authority (OTR) continuing its efforts to streamline tax administration and collection. The effectiveness of these efforts is a complex issue and recent data might be limited.
Tax burden: Compared to some regional neighbors, Togo's tax burden is considered moderate. The government has made efforts to increase tax collection efficiency, as evidenced by recent data from the International Monetary Fund (IMF) reports.

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