International partners see business opportunities in Togo
TOGO, one of Africa’s smallest countries, could become an international trading hub in the Gulf of Guinea and a magnet for increasing foreign investment.
The West African nation with just 6.3 million people has passed almost unnoticed compared with major African players such as Morocco, Algeria, South Africa, Angola and neighbouring Nigeria.
But four key factors are attracting international partners to Togo with money to invest.
• Its strategic location and its potential as a gateway to other African markets
• Abundant natural resources
• Improved economic indicators and business environment
• Potential for a new political landscape.
The Gulf of Guinea is gaining momentum in the wider context of Africa’s role as a resource-rich continent with vast economic and natural resources offering huge potential in investment opportunities.
The Gulf of Guinea sub-region had an annual gross domestic product (GDP) of US$112 billion, imports of US$31.63 billion and exports of US$45.5 billion in 2005. West and Central African countries - Angola, Equatorial Guinea, Gabon, Gambia and Nigeria - have led the way in transforming the Gulf’s economic importance and growing business opportunities. But other countries, including Togo, are starting to have a role despite existing political risks.
Togo borders Ghana to the West, Benin to the East and Burkina Faso to the North and has a history as a commercial hub crucial for re-exporting commodities to neighbouring markets.
Its capital, Lome, was an important regional trading centre based on its greatest asset, its port.
But political instability during the 1990s under former President Gnassingbe Eyadema’s regime (1967-2005) devastated Togo as a trading centre.
Its economy is dominated by commercial and subsistence agriculture. Food and cash crop production represent 47 per cent of GDP, providing work for 65 per cent of the people.
Mining is one of Togo’s most promising economic sectors. It is the world’s fourth largest phosphate producer and its estimated 60 million metric tons of reserves have potential to give this industry a boost.
There are also important limestone and marble deposits along with other minerals.
Togo’s government has granted exploration licences to international companies to search for offshore oil as well as gold, diamonds, manganese, nickel, zinc and platinum.
Togo has been depicted as Western-oriented, offering a hospitable foreign investment environment with an entrepreneurial hub in the region.
Togo was abandoned by international partners because of political instability throughout the 1990’s with fraudulent elections, violence and human rights abuses leading to deaths and thousands fleeing to Ghana and Benin.
Foreign investment fell sharply and donors stopped offering international assistance for 15 years as Togo remained isolated and economically devastated.
The death of President Eyadema in February 2005, after 38 years of ruling with an iron fist, brought hope for Togo.
The internal political situation began to stabilise following controversial presidential elections in 2005 which saw his son, Faure Gnassingbe, elected president. International investment and outside help returned gradually.
Togo has implemented reforms aimed at improving its business environment, opening it to foreign investors and aimed at boosting its private sector. It is emerging from economic isolation and economic indicators are improving:
*Its economy grew six per cent a year between 2006 and 2011 after 10 years of an average GDP growth of two per cent.
*GDP growth was five per cent in 2012 and the economy is forecast to grow at 5.1 and 5.5 per cent for 2013 and 2014 with inflation stabilising, according to the International Monetary Fund (IMF).
Foreign investment could boost the economic transformation. Programmes to privatise strategic sectors such as phosphates, telecommunications, tourism and banking are under way and there are projects to explore the renewable energy sector.
Togo is thriving with business opportunities but it also has political risks which could hinder much needed investment.
The possibility of a changing political landscape has been raised in the past year. Political debate before the November 2012 legislative elections was intense.
Successive postponement of the polls led to political and social turmoil before the election in July 2013. Fears of political violence threaten the country once more.
The July 2013 election saw the president’s party win a landslide victory and take 41.3 per cent of the votes.
The opposition rejected the results but with no real justification, according to domestic and international sources. The electoral process was deemed free and fair and no major disturbances were recorded.
Togo has proved its commitment to democracy and peaceful conflict-resolution. This will encourage international partners to engage more with the country.
Additional research by Carlota Ahrens Teixeira