Country Risk Rating

A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behavior. Corporate default probability is high. - Source: Coface

Business Climate Rating

The business environment is mediocre. The availability and the reliability of corporate financial information vary widely. Debt collection can sometimes be difficult. The institutional framework has a few troublesome weaknesses. Intercompany transactions run appreciable risks in the unstable, largely inefficient environments rated B.


  • Mining resources (phosphate, limestone and clay transformed into clinker) and agricultural resources (coffee, cocoa, cotton)
  • Has the only deep-water port in West Africa (port of Lomé), potential to become a regional hub
  • Public and private investment in infrastructure
  • Ongoing structural reforms (public finances, banking system, agriculture, phosphate and cotton sectors)
  • Member of WAEMU and ECOWAS
  • Mostly concessional external debt


  • Severe socio-political tensions
  • Deficient business environment
  • High unemployment and poverty rates (46.2% of the population in extreme poverty in 2020 according to the World Bank)
  • Deficient agricultural infrastructure: storage, processing, irrigation, inputs
  • Inadequate education, public health and transport infrastructure
  • Sickly banking sector, high bad-debt rate, especially among state-owned banks

Current Trends

An economic recovery supported by public investment

After suffering from lockdown measures and the collapse of trade linked to the pandemic, economic activity recovered in 2021 and should be firm in 2022. Household consumption (nearly 80% of GDP), which had contracted in 2020 due to the population’s impoverishment, rebounded in 2021. It is expected to increase in 2022 as agricultural production, on which 60% of the working population depends, picks up. National producer support programs, such as the National Agricultural Investment and Food and Nutritional Security Programme (PNIASAN), should stimulate agricultural production. However, the agricultural sector (40% of GDP) will remain vulnerable to bad weather, as illustrated by the impact of flooding in the north of the country, which led to a 43% decrease in cotton production in 2021. As part of the USD 7.8 billion National Development Plan 2018-2022, public investment in infrastructure will drive activity in 2022. It will include constructing and upgrading rural roads linking the capital to other cities (Lomé, Kpalimé, Aného). In addition, the Adetikiopé industrial platform (PIA), which is focused on processing and exporting natural resources and was opened in June 2021, could attract private investment. Improved port logistics should increase the development potential of the port of Lomé as a regional trade hub. In addition, the contribution of foreign trade should benefit from increased value generated by the processing of agricultural (coffee, cocoa, cotton) and mineral (phosphate) export products. The continued recovery of the world economy will continue to stimulate external demand for these products. The services sector, which accounts for more than half of GDP, rebounded strongly in 2021, driven by the recovery of container traffic through the port of Lomé. However, global supply chain disruptions could affect these activities.


Twin deficits financed by international aid

The fiscal balance recorded a significant deficit in 2021 because of spending to support the recovery, notably through increased capital investment. Although this spending is expected to remain a priority, the debt should narrow in 2022, mainly due to the pickup in activity at the port of Lomé, which accounts for 60% of government revenue, excluding external aid. In 2022, public debt was expected to resume the downward trajectory initiated by fiscal consolidation efforts undertaken under IMF supervision, interrupted in 2020 and 2021 amid the pandemic. Although the financing arrangement with the IMF (2017-2020) expired at the onset of the COVID-19 crisis, Togo’s authorities have expressed interest in a USD 240 million ECF program from the IMF to support the post-COVID recovery.


The current account deficit is expected to stabilize. This deficit primarily reflects the structural deficit in merchandise trade, with increased exports only partially offsetting the rebound in imports, which comprise purchases of capital goods and a high oil bill. The services surplus, which suffered from the pandemic, should continue gradually recovering to its pre-crisis level thanks to activity at the port of Lomé. The rest in current transfers should likewise recover, benefiting from increased remittances from abroad against the backdrop of the global recovery. The primary income account will also remain in surplus. Owing to weak net capital inflows, external grants and loans, mainly on concessional terms, should primarily finance the deficit.


Socio-political instability and security threats

President Faure Gnassingbé has been in power since 2005 and was re-elected in 2020 following elections marred by accusations of fraud. Notwithstanding his re-election, dissatisfaction with nearly six decades of Gnassingbe rule (Gnassingbe Eyadema, the current president’s father, was president from 1967 to 2005) remains strong. In September 2021, the president had parliament vote to extend the country’s state of a health emergency, which had been in place since April 2020, for another year, allowing him to govern by decree. Some believe the president uses these emergency measures to strengthen the regime’s grip and repress opposition, fuelling discontent. The risk of social unrest, therefore, remains high. However, although public discontent is growing, the support of the military and security forces should ensure that the regime remains in place. Concerns about electoral fraud, widespread corruption, and the rollback of fundamental freedoms could jeopardize the country’s relationship with Western donors. The business environment is further threatened by the exposure of the country’s north to terrorist activity in the Sahel region (Burkina Faso, Mali, and Niger). It could also be hurt by increasing piracy activity in the Gulf of Guinea, slowing down movement at the port of Lomé, and dampening the port’s growth aspirations.


Coface (02/2022)