Togo: Economy

Subsistence agriculture and commerce are the main economic activities in Togo; the majority of the population depends on subsistence agriculture. Food and cash crop production employs the majority of the labor force and contributes about 47% to the gross domestic product (GDP). Coffee and cocoa are traditionally the major cash crops for export. 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), production rebounded to 168,000 metric tons in 2002. However, cotton exports have plummeted in recent years due to arrears in payments to farmers, low cotton prices, and poor weather conditions; many cotton farmers have switched to other crops. As of December 2007, the Togolese Government had paid back all arrears to cotton farmers, and the industry is recovering slowly. Despite insufficient rainfall in some areas, the Togolese Government has achieved its goal of self-sufficiency in food crops--corn, cassava, yams, sorghum, millet, and groundnut. Small and medium-sized farms produce most of the food crop; farms range in size from one to three hectares.

Commerce is the most important economic activity in Togo after agriculture. Lome is an important regional trading center. Its deep water port operates 24 hours a day, mainly transporting goods to the inland countries of Mali, Burkina Faso, and Niger. Lome's "Grand Marche" is known for its entrepreneurial market women, who have a stronghold on many areas of trade, notably in African cloth. In addition to textiles, Togo is an important center for re-export of alcohol, cigarettes, perfume, and used automobiles to neighboring countries. Political instability during the last decade has, however, eroded Togo's position as a trading center.

In the industrial sector, phosphates are Togo's most important commodity. 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 800,000 tons in 2007. 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 benefited from private management, which took over in 2001, but the phosphate industry has all but collapsed in recent years. The International Monetary Fund (IMF) recommended a financial and strategic audit of the sector and that the government seek a new investor to take over. In September 2007 the government obtained a loan from the Islamic Development Bank to inject into the sector. The company produced 1.5 million tons of phosphates in 2009. Togo also has substantial limestone and marble deposits; limestone is becoming an increasingly important export.

When bilateral donors cut off assistance to Togo in the early 1990s as a result of the regime's poor democracy and human rights performance, the country was unable to service its debts to multilateral lenders, who ceased their programs as a result. As part of the Government of Togo's strategy to address donor concerns, in 2006 it undertook discussions with the IMF toward the resumption of a country program. Togo successfully completed an IMF Staff-Monitored Program in mid-2007, and the IMF resumed aid through a Poverty Reduction and Growth Facility arrangement. After the successful legislative elections in October 2007, missions from the EU, IMF, and World Bank visited Togo to assess the financial state of the country. The EU, immediately after the elections, reinitiated assistance with a grant of 26 million Euros to be used for urban development and democracy projects. The World Bank forgave $135 million in arrears in February 2008 and re-engaged with Togo in May. The African Development Bank followed suit in July 2008 by forgiving $24 million in arrears. Togo developed an interim poverty reduction and growth strategy paper in April 2008, which, after another successful evaluation in October 2008, led to the decision that Togo qualified for Heavily Indebted Poor Country debt relief. The EU provided an additional $22 million for direct budget relief in 2009 and provided $12 million to finance the presidential election.

Togo is one of 16 members of the Economic Community of West African States (ECOWAS). The ECOWAS development fund is based in Lome. Togo also is a member of the West African Economic and Monetary Union (UEMOA), which groups eight West African countries using the CFA franc; the eight countries are Benin, Burkina Faso, Cote d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo. The West African Development Bank (BOAD), which is associated with UEMOA, is based in Lome. ECOBANK, a pan-African private bank, also has its headquarters in Lome. Togo long served as a regional banking center, but that position has been eroded by the political instability and economic downturn of the early 1990s. Historically, France has been Togo's principal trading partner, although other European Union countries are important to Togo's economy.

Sources:
CIA World Factbook (September 2009)
U.S. Dept. of State Country Background Notes (July 2011)