Togo: January 1999
Economic reforms, with the simplification of the foreign trade regime, have contributed to an improved growth performance in Togo of around 4 per cent in 1997 compared to sharp declines in the early 1990s.
Togo should increase and bind its liberalization efforts
Economic reforms, with the simplification of the foreign trade regime, have contributed to an improved growth performance in Togo of around 4 per cent in 1997 compared to sharp declines in the early 1990s. However, the economy is still recovering from the 1991-93 social and political crisis which undermined the effects of the previous unilateral liberalization efforts. A new WTO Secretariat report on the trade policies of Togo states that although Togo's economy is among the most open in the West African subregion, its main constraint remains investment, which has been at a low level since the crisis.
The WTO report, along with a policy statement by the Togolese Government, will serve as a basis for the trade policy review of Togo to take place at the WTO on 27 and 28 January.
The report states that Togo's economy is mainly dependent on agriculture. Togo imports food, petroleum products, textiles and clothing, and exports phosphates, cotton, coffee and cocoa. Re-exports represent over a quarter of the total of goods exported by Togo. Togo's main trading partners are France, Canada, Brazil and the West African Economic and Monetary Union (WAEMU)1 countries, with France remaining Togo's main supplier. The report notes that while Togo's trade balance has recently improved, the current account balance is still in deficit.
Togo is a founding member of the West African Economic and Monetary Union (WAEMU). This Organization's aim is to create an economic union through the convergence of macroeconomic and sectoral policies and the harmonization of member countries' fiscal legislation. Monetary integration with a common central bank and a common currency the African Financial Community franc has already been achieved. The structure of the Common External Tariff has been defined and the transition towards implementation began in July 1998 and should end in January 2000. Togo is also a member of the Economic Community of West African States (ECOWAS).
As a signatory of the Fourth Lomé Convention, Togo receives aid from the European Union and many Togolese exports to the EU enjoy preferential treatment. Likewise, Togo's goods have preferential access to the markets of other developed countries under the Generalized System of Preferences. The report notes, however, that the scope of this non-reciprocal preferential treatment is limited, especially owing to the small number of products exported by Togo namely raw materials that are generally subject to zero or very low Most Favoured Nation (MFN) duties in the importing countries.
Togo's trade policy is essentially based on duties and taxes. As part of its economic reforms, Togo simplified the structure of its import duties. The entry duties currently levied on imports consist of a fiscal import duty, an infrastructure protection tax, a statistical tax and community taxes. The simple average of these import duties, exclusive of the infrastructure protection tax and the Community taxes, is 19.5 per cent, with very low level of dispersion. The import duty rates show a generally negative escalation. In addition to import duties and taxes, a value-added tax of up to 18% was introduced in 1995. The report observes that Togo's WTO bindings only cover a small number of products.
Agriculture accounts for about 40 per cent of the GDP, three quarters of the jobs and over half the export earnings. Cotton accounts for about a quarter of these earnings. The report notes that under its structural adjustment programme, the Togolese government has liberalized the agricultural sector and abolished price controls on most products.
The mining sector accounts for over a third of export earnings, of which phosphate contributes about a quarter. Togo is the fifth producer of calcium phosphate and possesses large reserves with a high phosphate content.
The manufacturing sector, mainly turned towards the domestic market, represents less than 10 per cent of the GDP. It is the most protected of all economic activities in Togo with a large number of products subject to import duties of over 20 per cent. The report remarks that the negative escalation of these duties, from semi-finished to finished products, could hold back the development of final processing activities in Togo.
A considerable portion of the GDP 44 per cent in 1996 comes from the tertiary sector, whose development has been assisted by transit operations through the port of Lomé, around which the Togolese economy is organized. While Togo has made unilateral liberalization efforts in the services sector, the report notes that Togo's limited commitment under the WTO's General Agreement on Trade in Services (GATS) do not reflect these changes. The report also notes that state-owned enterprises are still preponderant in this sector.
Intellectual property rights are protected in Togo by the Bangui Industrial Property Agreement signed by some 15 African countries. Work is in progress in the African Intellectual Property Organization (AIPO) set up under the Bangui Agreement - to bring provisions of the Agreement into line with the obligations of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
The report concludes that technical assistance would enable Togo to identify the opportunities offered by the multilateral trading system and gain a better understanding of the scope of its undertakings so that they may be better respected. In addition, as the bindings carried out by Togo fall short of the liberalization efforts undertaken by the country in trade in services, such assistance could help widen the scope of the bindings with a view to attracting investors by giving them confidence in the irreversible nature of the reforms.
Notes to Editors
The WTO's Secretariat report, together with a policy statement prepared by Togo, will be discussed by the WTO Trade Policy Review Body (TPRB) on 27 and 28 January 1999. The WTO's TPRB conducts a collective evaluation of the full range of trade policies and practices of each WTO member at regular intervals and monitors significant trends and developments which may have an impact on the global trading system. The Secretariat report covers the development of all aspects of each of Togo's trade policies, including domestic laws and regulations, the institutional framework, trade policies by measure and by sector. Since the WTO came into force, the new "areas" of services and trade-related aspects of intellectual property rights are also covered.
To this press release are attached the summary observations from the Secretariat report and a summary of the government report. The full Secretariat and government reports are available for journalists from WTO Secretariat on request (call 41 22 739 5019). They are also available for the press in the newsroom of the WTO internet site (www.wto.org). The Secretariat report, together with the government policy statement, a report of the TPRB's discussion and the Chairman's summing up, will be published in hardback in due course and will be available from the WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following reports have been completed: Argentina (1992 & 1998), Australia (1989, 1994 & 1998), Austria (1992), Bangladesh (1992), Benin (1997), Bolivia (1993), Botswana (1998), Brazil (1992 & 1996), Burkina Faso (1998), Cameroon (1995), Canada (1990, 1992, 1994, 1996 & 1998), Chile (1991 & 1997), Colombia (1990 & 1996), Costa Rica (1995), Côte d'Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic (1996), Egypt (1992), El Salvador (1996), the European Communities (1991, 1993, 1995 & 1997), Fiji (1997), Finland (1992), Ghana (1992), Hong Kong (1990, 1994 & 1998), Hungary (1991 & 1998), Iceland (1994), India (1993 & 1998), Indonesia (1991, 1994 & 1998), Israel (1994), Jamaica (1998), Japan (1990, 1992, 1995 & 1998), Kenya (1993), Korea, Rep. of (1992 & 1996), Lesotho (1998), Macau (1994), Malaysia (1993 & 1997), Mali (1998), Mauritius (1995), Mexico (1993 & 1997), Morocco (1989 & 1996), New Zealand (1990 & 1996), Namibia (1998), Nigeria (1991 & 1998), Norway (1991 & 1996), Pakistan (1995), Paraguay (1997), Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992 & 1996), Slovak Republic (1995), the Solomon Islands (1998), South Africa (1993 & 1998), Sri Lanka (1995), Swaziland (1998), Sweden (1990 & 1994), Switzerland (1991 & 1996), Thailand (1991 & 1995), Trinidad and Tobago (1998), Tunisia (1994), Turkey (1994 & 1998), the United States (1989, 1992, 1994 & 1996), Uganda (1995), Uruguay (1992 & 1998), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).Back to top
The Secretariat s report: summary
POLICY REVIEW BODY
Report by the Secretariat Summary Observations
THE ECONOMIC ENVIRONMENT
Situated on the west coast of Africa, Togo is a least-developed country (LDC) which became independent on 27 April 1960. In the second half of the 1970s the Togolese authorities undertook a programme of public investment to diversify the economy that was strongly dependant on phosphates. The difficulties encountered with the State-owned enterprises created for that purpose, together with Togo's natural difficulties as a LCD and the large public deficits associated with this investment and a rapid expansion of the wages and salary bill led to a substantial increase in internal and external payment arrears. From 1979 onwards the authorities introduced a series of structural adjustment programmes (SAP) intended to correct these imbalances.
The implementation of the programmes was interrupted several times, in particular by the social and political crisis that Togo went through in 1991 at the beginning of its transition to democracy. In January 1994 the African Financial Community franc (CFA franc) was devalued: its parity changed from CFAF 50 to 1 French franc to its present level of CFAF 100 to 1 French franc. Following the devaluation Togo introduced a new SAP for 1994-1997 intended to create an environment conducive to favourable economic activity. To that end, the first stage of privatization, which also involves the Togolese Phosphates Office (OTP), has been almost completed.
In general terms the reforms have led to a simplification of the structure of import duties, and the rates of these duties are now among the lowest in the West African Economic and Monetary Union (WAEMU), of which Togo is a member. The improvement in the performance of the tax authorities and customs administration and the tax components of the reforms made it possible to increase the internal revenue from 10.9 per cent of the Gross Domestic Product (GDP) in 1993 to more than 18 per cent in 1996 and to about 16 per cent in 1997. An upturn in real GDP was recorded from 1994 onwards, at rates above 8 per cent, except in 1997 when growth was estimated at 3.9 per cent, although these rates are partly a reflection of the process of catching up following the major falls in the years 1992 and 1993. The external balances also improved. However, the Togolese economy, having already been weakened by the crisis and the strong demand for local goods partly induced by the substitution effect of devaluation, sustained inflation, whose rates had not, by 1997, returned to their previous level.
The Togolese economy is mainly dependent on agriculture (cotton, cocoa, coffee and food crops), which accounts for about 40 per cent of the GDP, three quarters of the jobs and over half the export earnings. Cotton accounts for about a quarter of these earnings. Togo is the fifth world producer of calcium phosphate and possesses large reserves with a high phosphate content. The subsoil also contains marble (now being exploited) and iron ore (not exploited). The mining sector accounts for over a third of export earnings, of which phosphate contributes about a quarter. The manufacturing sector, mainly turned towards the domestic market (principally on account of the size of the production units) represents less than 10 per cent of the GDP. The food-processing industry is the most important branch of the sector. A considerable portion of the GDP (44 per cent in 1996) comes from the tertiary sector, whose development has been assisted by transit operations through the port of Lomé, from which an important road network leads to the land-locked countries to the north of Togo. In addition, the main supplier of jobs in Togo (396,000 jobs in 1997) is the informal sector (excluding agriculture), which considerably developed during the crisis of 1991-1993. It represents about 33 per cent of the value added of the manufacturing sector, 52 per cent of the services sector and 37 per cent of the trade sector.
Long in deficit, the Togo balance of trade was in surplus in 1994, 1995 and 1997 (estimate). On the other hand, the balance of services is in chronic deficit, which sustains that of the balance on current account. The latter has increased since devaluation as a result of the increase in CFA franc terms of the interest on foreign debt and expenditure on insurance and freight. Togo's foreign trade mainly involves the import of food and petroleum products and textiles and clothing and the export of phosphates, cotton, coffee and cocoa. Re-exports represent over a quarter of the total of goods exported by Togo.
Togo's main trading partners are France, Canada, Brazil and the WAEMU countries. South Africa, Indonesia and Malaysia have become important outlets for Togolese products in recent years. Togo exports phosphates to Canada (the main destination for Togolese products) and South Africa. Cotton is mainly sent to Chinese Taipei and Brazil and coffee to the European Union. Despite a decrease in its share of Togolese imports, France is still Togo's main supplier. In all about one fifth of Togolese imports come from countries in the West African subregion. However, apart from the increase of imports from Côte d'Ivoire and Senegal, the devaluation of the CFA franc does not seem to have favoured the substitution of goods from WAEMU countries for those of other suppliers. The same is true of Togolese products going to other WAEMU countries.
In accordance with the provisions of the 1992 Constitution, Togo is a democratic State. The President of the Republic is the Head of State; he is elected by universal suffrage for a five-year term renewable only once. As the holder of executive power, he establishes the broad outlines of State policy and appoints the Prime Minister and the other members of the Government. The National Assembly exercises legislative power. An Economic and Social Council gives its advice on all matters brought to its attention by the President of the Republic, the Government, the National Assembly or any other public institution; it must also be consulted on every draft plan, programme or instrument having an economic and social character.
Togo has no commercial code and French law is applied in many areas. Nevertheless, national laws and regulations do exist. Coming into force in 1989, the Investment Code (Code of 1965 revised on several occasions) is intended to encourage export-oriented investment, increase the employment of Togolese workers, promote the establishment of SMEs, encourage the decentralization of economic activities and make optimum use of the country's natural resources. It guarantees the same rights and obligations to national and foreign enterprises. Similarly, it guarantees the freedom of capital transfer and of income and salaries for foreign natural or legal persons. Plans to revise it are subordinated to the expected introduction of a community investment code in the WAEMU framework. In addition, in accordance with the provisions of the Mining Code of 1996, any natural or legal person, whether Togolese or foreign, having the necessary technical and financial capacity, is entitled to exploit mineral substances. However, the right to engage in such operations can be acquired only by virtue of mining titles issued by the Ministry of Mines. The Code gives advantages, especially fiscal advantages, to mining companies. Finally, important advantages, including fiscal and customs advantages, are granted under the free zone regime, which Togo has had since 1989. This regime is one of the most important in West Africa.
Togo became a Member of the WTO on 31 May 1995, after having de facto applied the GATT from April 1960. It grants at least most-favoured-nation (MFN) treatment to all its trading partners. Togo, following the example of other WTO Members, has adopted in their entirety the results of the Uruguay Round and entered into commitments in the form of binding of duties and measures relating to the modes of supply of certain services. It has benefited from the treatment granted to the least-developed countries, notably in the form of exemptions or delayed implementation of certain provisions, and it should benefit in particular from the strengthening of rules and disciplines in the multilateral trading system in sectors such as agriculture, which are particularly important for the country. Togo hopes that the integrated programme launched by the WTO and other organizations at the High-Level Meeting held in Geneva in October 1997 will go beyond the technical assistance objectives therein: Togo's main concern is to increase and diversify production so as to be able to take better advantage of the opportunities available as well as those which should result from the continued liberalization at the multilateral level.
Togo is a founder member of the West African Economic and Monetary Union (WAEMU). This organization's aim is to create an economic union through the convergence of macroeconomic and sectoral policies and the harmonization of member countries' fiscal legislation; monetary integration, with a common central bank, the Central Bank of the West African States (BCEAO), and a common currency (the African Financial Community franc), has already been achieved. The structure of the Common External Tariff (CET) with four rates (1 per cent, 6 per cent, 11 per cent and 21 per cent plus the Community levies totalling 1 per cent) has been defined, and the transition towards implementation began in July 1998 and should end in January 2000, by which date the customs union should have been completed. Togo is also a member of the Economic Community of West African States (ECOWAS) whose Treaty also envisages the creation of a customs union, although the timetable for establishing the union has not been respected.
As a signatory to the Fourth Lomé Convention, Togo receives aid from the European Union and benefits from the Stabilization System for Export Earnings (STABEX). Under the Convention, many Togolese exports to the EU enjoy non-reciprocal preferential treatment in the form of exemption from import duties. Likewise, Togo's goods enjoy non-reciprocal preferential access to the markets of developed countries other than the members States of the European Union under the Generalized System of Preferences. The scope of this non-reciprocal preferential treatment is limited, especially owing to the small number of products exported by Togo, namely raw materials that are generally subject to zero or very low MFN import duties in the importing countries. As at July 1998, Togo had not been involved in any dispute settlement proceedings under the GATT, the WTO or any other trade agreement signed by it.
TRADE POLICY FEATURES
Trade policy instruments and their impact
Togo's trade policy is essentially based on duties and taxes. The reforms introduced by Togo as part of its structural adjustment programmes have enabled it to liberalize foreign trade operations, abolish certain monopolies and simplify the structure of import duties. In 1990 Togo adopted the Harmonized System Nomenclature and has applied the 1996 version since 1 January 1998. The entry duties currently levied on imports consist of a fiscal import duty (DFE) of 5, 10 or 20 per cent; a statistical tax (TS) at the single rate of 3 per cent; an infrastructure protection tax (TPI) of CFAF 2,000 per tonne; and community taxes levied on behalf of WAEMU (PSC) and ECOWAS (PC) at 0.5 per cent each. The simple arithmetic average of these import duties (excluding PCS, PC and TPI) is 19.5 per cent, with a minimum of 3 per cent and a maximum of 23 per cent. With their very low level of dispersion, the import duty rates show a generally negative escalation from semi-processed goods to finished products. The most heavily taxed goods are fishery products, tobacco, clothing, footwear, leather goods and articles made of plastic. On the other hand, mining products, printed matter and non-electrical machines are the least heavily taxed goods.
In addition to import duties and taxes, value-added tax (VAT) at three rates (0, 7 per cent and 18 per cent) was introduced in 1995. Certain products, principally medicines and medical equipment and agricultural and fisheries, inputs are exempt. Specific duties are also levied on imports of beverages, tobacco, flour, oils and fats, cement and industrial gas; these taxes sometimes vary according to the origin of the products (Togo, ECOWAS or other countries). A tax on the consumption of petroleum products (TCPP), in an amount of CFAF 50 per litre, is payable on all petroleum products except paraffin for domestic use (which is exempted). A down payment (of 1 per cent for registered importers and 5 per cent for non-registered importers) on business profits and on the corporate tax is also levied on importation on behalf of the Directorate General of Taxation.
Under the Uruguay Round, Togo has bound the import duties and taxes on agricultural products (like other WTO Member countries) and those applicable to products coming under Chapters 43 (furskins and artificial fur), 75 (nickel and articles thereof) and 78 (lead and articles thereof) of the Harmonized System at the ceiling rate of 80 per cent. Thus, the bindings cover a relatively small number of products and leave Togo a great deal of room for manoeuvre in view of the large gap between the bound rates and rates actually applied. The other duties and taxes on these products have also been bound: the statistical tax at the rate of 3 per cent, the toll on sea cargo in an amount of CFAF 200 per tonne and the customs stamp on the taxes collected at the rate of 4 per cent where the product enters with exemption from the DFE. With the introduction of the TEC, the WAEMU Commission intends to renegotiate the tariff concessions of all Member countries.
Togo possesses 45 national standards, all of which have been approved, in particular on water, building materials and tinned foods. It has dismantled most of the quantitative restrictions on imports and those currently in force are retained for reasons of health, security or morals. However, imports of potatoes can be prohibited from August to February, when local production covers local demand. The importation of gold requires prior authorization by the Minister of Finance and Economic Affairs. Furthermore, within the framework of the imports inspection programme, execution of which was entrusted to the COTECNA company in 1995, all importers of goods of an f.o.b. value exceeding CFAF 1.5 million in the case of those arriving by air or sea and CFAF 1 million in the case of those arriving by land must complete an Intention to Import form and lodge it with the inspection company. The COTECNA procedures connected with the Intention to Import take about two weeks. Togo has no national legislation regarding anti-dumping, countervailing or safeguard measures.
Except for phosphates, which are still subject to licensing, there are no longer any quantitative restrictions on exports. However, the export of local food products can be temporarily suspended in case of shortage. The only export duties and taxes still in force are levied on re-exports and transit operations. Thus, a special re-export tax (TSR) is levied on rice and sugar at a rate of 1 per cent and on other products at a rate of 4 per cent; vehicles are exempt. In practice, no taxes are levied on transit operations to the land-locked countries of the Sahel, although the TS, the TPI and the customs stamp (TD) are levied on transits to other countries.
In order to stimulate exports, the Togolese authorities have provided for advantages through the Investment Code and established the free zone regime. Thus, enterprises approved under the Investment Code which export part of their production are exempted on a portion of their profits (for calculating the corporate tax (IS)) and on a portion of their turnover (for the calculation of the minimum formula tax). This is equal to a proportion of the turnover exported in the course of a financial year as compared with the global turnover excluding VAT. In addition, enterprises processing raw materials and intermediate products of Togolese origin, representing in value at least 60 per cent of the total purchases of these materials and products entering their factories enjoy total exemption from the minimum formula tax for seven years. The enterprises with free zone status (they must export at least 80 per cent of their production) enjoy, inter alia, partial exemptions from customs duties, and tax exemptions, including corporation tax. Additional advantages are also offered to them, in particular, the possibility of having a foreign currency account, freedom to transfer capital and preferential tariffs for port services and the consumption of water, electricity and telecommunications services (e.g. 6 per cent discount for the telephone).
Since 1967 the prices of goods and services have been fixed freely by the economic operators in Togo, except for the prices of water, electricity, petroleum products and gas, which are regulated. A bill to organize competition in Togo has been placed before the National Assembly with a view to updating the provisions of the price regulations and the rules applicable in matters of competition. This provision, which is now being examined, envisages the establishment of a National Competition and Consumption Commission. In addition, new impetus was given at the beginning of the 1990s to the programme of State disengagement from production and marketing operations, which had been launched in 1983.
Intellectual property rights are protected in Togo by the Bangui Industrial Property Agreement signed by some 15 African countries, under which the African Intellectual Property Organization (AIPO) was set up, as well as by a law of June 1991 and its application texts to protect copyright, folklore and related rights. Work is in progress in AIPO to bring the provisions of the Bangui Agreement into line with the obligations of the WTO Member countries contained in the Agreement on Trade-Related Aspects of Intellectual Property Rights. In Togo most of the disputes concerning intellectual property (the most common infringements mainly relate to the counterfeiting of a trademark) are settled privately: the absence of coordination and the limited resources of the administrative departments acting in this area (including those responsible for enforcement) are probably the main reasons.
Policies by sector
The Togolese economy is organized around its main port, the Lomé Autonomous Port (PAL). Most of Togo's foreign trade passes through this port, which serves as a transit point for goods intended for the land-locked countries of the Sahel such as Burkina Faso, Mali and Niger. Exploitation of this position has encouraged the installation of communication networks linking the port to the land-locked countries and, at the same time, the opening up of Togo to the outside world. The structure of the import duties, by encouraging the transit and importation of certain goods for which there is a strong demand in the subregion, has also helped to ensure the preponderance of the services sector within the Togolese economy. The social and political crisis that Togo experienced at the beginning of the 1990s impaired the dynamism of this sector, which the Government is currently trying to restore. However, the State continues to have a strong presence in the sector through its wholly owned enterprises.
The agricultural sector has been substantially liberalized and price controls on most products have been abolished. This liberalization has encouraged the arrival of private exporters in areas such as coffee and cocoa. However, cotton, Togo's main cash crop, continues to be dominated by a State- owned company, the Togolese Cotton Company, which intervenes in production (outreach action) and marketing. One of the chief problems facing agriculture in Togo is that of storing and preserving produce, which is the reason for major seasonal price fluctuations (very low prices at harvest time and excessively high prices during transition periods and drought years). This problem is aggravated by the lack of infrastructure which makes access to certain regions difficult (particularly during the rainy seasons), including the main production areas. Agriculture also suffers from the difficulty of access of peasant farmers to credit.
Limited to the exploitation of phosphate and limestone, the mining activities, which so far have been dominated by a State-owned company, the Togolese Phosphates Office (OTP), could be developed with privatization, including that of part of this enterprise's capital, which is envisaged as part of the measures formulated by the Government to attract investors into the sector. The Mining Code was revised in 1996 to that end. Furthermore, in terms of import duties, the mining sector is the least protected in Togo.
Since 1989, the free zone regime has reflected the direction given to Togo's industrial policy, namely the promotion of export-oriented enterprises (particularly industrial ones). Despite the potential of the Togolese economy for development of this sector, factors such as the social and political crisis, the structure of the import duties, which the advantages offered by the various codes should correct, the lack of integration of the various sectors and the increase in the cost of inputs as a result of the devaluation of the CFA franc in 1994 have held back industrial development in Togo. The manufacturing sector is the most protected (in terms of import duties) of all economic activities in Togo and, in fact, a large number of products of the sector are subject to import duties of over 20 per cent. However, the negative escalation of these duties, from semi-finished products to finished products, could hold back, without prejudice to exemptions, the development of final processing activities in Togo; this could be an explanation for the predominance of the production of semi-finished goods in the sector.
The preponderance of State-owned enterprises in the services sector is a reflection of the slowness by the Togolese authorities in liberalizing this sector. Moreover, the bindings carried out by Togo remain limited to the measures relating to the modes of supplying construction and related engineering services, tourism and travel-related services and recreational, cultural and sporting services; this does not reflect the liberalization effort unilaterally carried out by Togo in this sector.
TRADE POLICIES AND TRADING PARTNERS
The major liberalization efforts unilaterally carried out by Togo were undermined by the social and political crisis that shook the country from 1991 to 1993. The Togolese economy is recovering slowly from this experience, and Togo possesses the necessary potentialities to take up such a challenge. Its economy, which is among the most open in the West African subregion, has generally operated according to market rules, even at a time several State-owned enterprises were operating there. The main constraint remains investment, especially foreign investment, which has been at a low level since the crisis.
The establishment of the WAEMU customs union could increase the nominal protective tariff and the rates of effective protection in Togo. Since the Togolese economy is already quite liberal in comparison with those of other WAEMU countries, the advent of the union should not cause too much anxiety to local producers: Togolese products did not receive strong competition from products from other WAEMU members following the devaluation of the CFA franc. Given its current advantages, in particular, its infrastructure, Togo could become one of the poles of attraction for the investment that the establishment of the customs union should encourage, with access to the markets of the union being at stake. However, the advantages provided by Togo's free zone regime could be compromised by the entry into force of the Community Investment Code, since Togo is one of the few countries of the union to have managed to establish one; that regime is also greatly preferred by investors to that of the Investment Code.
Togo would like technical assistance to be provided so as to help the WTO Agreements become better known. In accordance with the wishes of the Togolese authorities, this assistance should, inter alia, enable the country to identify the opportunities offered by the multilateral trading system and gain a better understanding of the scope of its undertakings so that they may be better respected. In addition, as the bindings carried out by Togo fall short of the liberalization efforts undertaken by the country in trade in services, such assistance could help to improve its performance in this area and, by giving investors confidence in the irreversible nature of the reforms, attract finance, especially from abroad.Back to top
POLICY REVIEW BODY
Report by the Government Parts I and II
1. Towards the end of the 1970s, Togo experienced a deterioration in its internal and external balances caused, inter alia, by a prolonged decline in the terms of trade attributable to the fall in world prices of its principal exports. In 1983, the Government therefore launched a process of adjustment aimed at re-establishing economic viability through in-depth structural reforms, and at ensuring renewed growth. The successive programmes implemented by the Government were backed by the International Monetary Fund (IMF), the World Bank and other bilateral and multilateral funding sources.
2. These adjustment efforts, which produced relatively satisfactory results from the point of view of macroeconomic balances, were unfortunately seriously disrupted and undermined as from the last quarter of 1990 by the socio-political disturbances which accompanied the process of democratization. The socio-political crisis culminated in 1993 with a general strike which lasted more than nine months in some branches of activity.
3. The crisis was felt particularly strongly in the secondary and tertiary sectors whose production units are for the most part located in and around Lomé. Only the primary sector experienced growth as a result of the influx of labour as the urban population moved to the country during the socio-political unrest.
4. Government revenue fell sharply, while expenditure did so to a lesser extent. Thus, the government budget deficit worsened seriously with the accumulation of internal and external arrears.
5. In this very poor financial and economic context, the exchange rate of the CFA franc against the French franc was adjusted on 12 January 1994, initially aggravating inflation in the economy in general.
6. In order to put a halt to the persistent deterioration in the economic and financial situation and take full advantage of the opportunities offered by the devaluation of the CFA franc, the Government decided to introduce three-year and medium-term adjustment programmes aimed at re-establishing economic balances and fostering equitable growth.
7. In that connection, the Prime Minister defined the overall economic and trade policy objectives of the country in his key-note address of September 1996 (see Section II.(1)).
8. Considerable efforts were then deployed to achieve the main macroeconomic objectives. The Togolese economy began to grow again with a relatively low inflation rate and an improved balance in the external current account. However, the rate of investment remained low in relation to the country's needs.
9. For the last few years, the country has had a relatively stable democratic political framework featuring a multi-party system, a free private press and a number of democratic institutions (Constitutional Court, high authority for audiovisual media and communication, Supreme Council of Justice, Court of Audit, Parliamentary Court of Justice, Supreme Court).
10. To summarize, in this socioeconomic context, Togo achieved positive, variable growth rates (16.4 per cent in 1994; 6.8 per cent in 1995; 9.1 per cent in 1996 and 4.7 per cent in 1997), while remaining one of Africa's least-developed countries with a per capita GNP of US$320 in 1994.
11. In the framework of its overall economic and social development policy, Togo has for many years now been implementing a liberal trade policy.
12. Although confirmed as an open-door policy in the 1970s, this liberal option has been punctuated with interventionist measures, including:
(i) A state-trading monopoly;
(ii) tariff and tax measures;
(iii) non-tariff measures such as:
- regulation of imports and exports resulting in quotas and prohibitions;
- protection of local industries;
- import and export licensing;
- registration of economic operators;
- price approval and controls, etc.
1. In response to the constraints imposed by the domestic and international economic and trade environment, Togo began in the 1980s, either autonomously or at the recommendation of the IMF, the World Bank and other international organizations, to strengthen its policy of liberalization by eliminating various interventionist measures and freeing up economic and trade activities in general. It also stepped up efforts to attract foreign investment.
13. In response to the economic and social development aspirations of the country's populations, the Prime Minister, in his key-note address of September 1996, defined the country's overall economic policy objectives as follows:
(iv) Restore macroeconomic and financial balance;
(v) revive the development programmes with a view to achieving sustained, durable and balanced economic and trade growth. The following programmes are involved:
- fiscal consolidation;
- privatization of State enterprises;
- adjustment and reflation of the economy;
- strengthening of development management capacities, including good government, poverty alleviation, adjustment of the financial sector, support for the private sector, and the action plan for the development and promotion of trade;
- improve the country's external competitiveness;
- take advantage of subregional economic integration within WAEMU and ECOWAS;
- take advantage likewise of the operational activities of the United Nations system with respect to economic, trade and social development.
14. The planned quantitative results of these programmes are:
(i) To achieve an average annual growth rate of real GDP of 6 per cent;
(ii) to maintain an inflation rate, measured in terms of the consumer price index, of 3 per cent on average;
(iii) reduce the deficit in the balance on current account, grants included;
(iv) settle domestic arrears;
(v) reduce external arrears as far as possible;
(vi) substantially reduce the level of non-IMF domestic borrowing by the Government and public sector enterprises.
15. The resources needed to implement these programmes and achieve the intended results are to come from higher domestic savings and an increase in the level of external financing.
16. With respect to trade in general, and in spite of the economic difficulties and socio-political disruptions, Togo is keen to strengthen and improve its position as a trading centre and transit country in West Africa.
17. Thanks to its infrastructure, in particular the autonomous deep water port, the international airport of Lomé and Niamtougou, its export-processing free zone, its road network, etc., Togo is a trade crossroads for the West African subregion, and in a spirit of solidarity and complementarity, it serves as a relay centre for imports and exports of its neighbours, in particular the land-locked countries.
18. Beyond this concern with national, regional and continental matters, Togo has been more than simply a by-stander in the new international economic and trade context.
19. In addition to the measures aimed at the general liberalization of economic and trade activities, Togo took the necessary steps to respond to the requirements of this new international context and became an original Member of the WTO on 31 May 1995.
20. Over the past few years and in the future, Togo's trade policies have been and will continue to be concerned with:
(i) Introducing an action plan for the development and promotion of trade;
(ii) improving the institutional and regulatory framework with a view to creating an environment favourable to the private sector, to investment and to the promotion of exports and foreign trade;
(iii) drawing up and implementing follow-up and support measures to ensure that liberalization effectively benefits the private sector, consumers and the national economy and becomes a factor in the country's economic and social development;
- identifying the comparative advantages and disadvantages of the liberalization measures and ensuring that the economic operators are aware of the action that has to be taken to reduce or avoid the disadvantages (inflation, abusive or inappropriate influence of devaluation and VAT on prices) while maximizing the advantages (diversification of sources of supply, fair competition, lower inflation);
- strengthening and improving output and productivity of goods that can actually be exported;
- identifying and implementing measures to encourage and support diversification and intensification of production for export of non-traditional goods and goods in the agricultural, fishing, industrial, crafts and livestock sectors;
- strengthening and improving structures, mechanisms and procedures for collecting, storing, managing and disseminating export and import market information;
- strengthening and improving human and institutional capacities as regards management and the promotion of trade and related activities, and ensuring coordination among the structures involved in trade promotion;
- stepping up participation in international and regional fairs to promote exportable products;
- improving competitiveness from the point of view of quantity, quality and standards;
- developing and implementing measures to stimulate investment and the financing of production for export through appropriate structures;
- rationalizing imports (better sources of cheaper supply with a view to obtaining the best value for money);
- ensuring better domestic market regulation and organizing competition;
- pursuing the process of State withdrawal from non-strategic sectors;
- intensifying and improving transit trade;
- enhancing the country's involvement in international organizations dealing with international trade;
- following up and taking full advantage of the bilateral and multilateral agreements and conventions to which our country is party, as well as the different preference systems and liberalization arrangements for which they provide;
- ensuring that the private sector, civil society, universities, NGOs, trade unions and civil associations are all actively associated with the development and implementation of the above measures.
21. The chief concerns in this area are to:
- Consolidate democracy, security and peace;
- reinforce national solidarity;
- take up the educational and cultural challenge;
- engage in active diplomacy focusing on effective cooperation.
2. These concerns form the basic conditions for a social environment in which the economic and trade policy objectives can be achieved.
22. The Government's sectoral objectives consist in liberalizing activities, strengthening human, institutional, material and infrastructural capacities, and enhancing efficiency in the various sectors.
23. The Government's objectives in this sector are to restructure the ministerial departments concerned in order to make them more dynamic and efficient in carrying out their tasks, and also to transform the Togolese public administration into an efficient development tool.
24. Thus, the strategy to modernize public administration aims, inter alia, at redefining the essential roles of the State and of each ministerial department concerned, at implementing the programme for administrative decentralization, a coherent employment policy including an appropriate manpower plan, and incentives to stimulate a spirit of emulation with a view to boosting productivity. It is in this context that, with the recent restructuring of the Government, a ministry was created to take charge of modernizing the administration.
25. Togo's budgetary policy essentially aims at respecting the convergence criteria defined within the WAEMU, and its principal medium-term objective is to boost public saving in order to maintain a high rate of public investment in general and investment financed by domestic resources in particular. Appropriate measures will be taken to that end, directed towards the rationalization of expenditure in order to achieve an overall deficit level that can be financed through ordinary resources, making it possible to settle internal and external arrears and reduce the overall deficit excluding grants.
26. Togo's overall monetary policy will continue to be coordinated at the regional level with its WAEMU partners so that foreign exchange reserves can guarantee the stability of the CFA franc. Interest rate policy will be designed to maintain intervention rates at levels which make it possible to attract and retain capital in member countries. The Togolese authorities will continue to cooperate with their WAEMU partners in strengthening the mechanisms used by the regional central bank to absorb bank liquidities, pursue the progress achieved in introducing a regional financial market and enhance the efficiency of the process of mobilizing domestic financial resources.
27. The option of State withdrawal from the production of goods and services and the dismantling of monopolies should greatly facilitate the liberalization of trade and the development of viable financial, banking and insurance systems for the benefit of domestic and foreign trade and service operators both upstream and downstream, including transport, post and telecommunications, water and electricity, and tourism.
28. The Government's objectives in this sector include:
- Reinforcement, rehabilitation and regular maintenance of urban and rural road infrastructures, to which end a road maintenance fund has been created;
- further liberalization of maritime transport; in this connection, freight distribution has been eliminated in order to allow economic operators to choose their means of transport freely, and port fees have been considerably simplified;
- strengthening, improving and facilitating transit trade through the Togo corridor with a view to reinforcing Togo's external competitiveness. To that end, the Government plans to create a dry port at Blitta to make it easier to transport goods towards the interior of the country and hinterland countries;
- restructuring and improvement of rail transport;
- improvement of the efficiency of air transport services;
- reducing the social costs of transport and ensuring proper safety in the transport sector.
(b) Post and telecommunications
29. To ensure efficient and competitive telecommunications services, in 1995 the Government launched a process of liberalization which should culminate in 1999 with the opening up of the capital of Togo Telecom to the private sector. The long-term objective is the liberalization of all segments of the market. The process, which has already begun with the granting of a mobile telephone licence, includes, inter alia, the setting up of a regulatory agency for the sector together with a frequency management unit.
30. As regards the postal system, the restructuring process is to be pursued and will ultimately result in privately-run postal services.
(c) Electricity and water
31. In the field of electricity and water, the Government's action will focus on pursuing the implementation of measures designed to recover service costs and to apply the corresponding charges with a view to making production units as profitable as possible, thereby increasing their capacity for financing their own investments.
32. It was to that end that the implementation of the plan for the settlement of internal arrears focused particularly, in 1997, on the debt of the Electric Power Company of Togo (Compagnie énergie électrique du Togo - CEET) and the National Water Company of Togo (Régie nationale des eaux du Togo - RNET) with the State and State companies. In order to improve management efficiency in the sector, the Government will also have recourse to the private sector, either through outright privatization, or by arrangements such as privatization of commercial management (in the case of RNET) or concessions (in the case of CEET).
33. The Government will also seek to promote private sector investment in energy and water management with a view to improving the supply to the population. In the long term, it will also seek an overall solution to its energy problems in the framework of subregional cooperation.
34. The Government's efforts will focus in the long term on increasing electricity production in order to reduce the country's dependence on imports. The responsibility for these efforts is entrusted to the Beninese Electrical Community (Communauté électrique du Bénin - CEB), and they essentially concern the rehabilitation and maintenance of thermal power plants, the construction of a new dam on the Mono River, and the evaluation and exploitation of a country's energy resources.
35. Sectoral objectives in this area consist, inter alia, in:
- Drawing up a national master plan and regional master plans for the development and promotion of tourism;
- setting up of tourism promotion services: national office, consultative committee, regional council;
- updating the regulatory and tax framework to provide greater incentives and make it more attractive;
- developing existing tourist sites (renovation, equipment, maintenance, safety, hygiene) as well as potential sites: the coastline, lake shores and other sites in Lomé and in the interior;
- developing human resources in the tourism business and training tourist guides;
- enhancing awareness among the different categories of law enforcement services involved in receiving tourists, ensuring their safety and protecting tourist sites;
- promotion of national and subregional tourism; in this connection, the first "national tourism caravan" was recently organized on the occasion of World Tourism Day. At the subregional level, Togo has organized, with its partners, the "Entente Tourist Visa" in the framework of the Entente Council.
36. The Government's objectives in the field of agriculture consist, inter alia, in:
- Pursuing the liberalization of the various sectors. To that end, following the complete liberalization of the coffee-cocoa sector from primary marketing through to export, in the cotton sector too exports have begun to be liberalized, with the setting up of the Société industrielle de coton (SICOT), which gins the cotton and exports the fibre on its own account;
- setting up a programme to revive the agricultural sector;
- setting up rural and cooperative credit funds as well as a village development fund;
- improvement of the income and standard of living of the rural population by boosting productivity and applying a policy of remunerative prices;
- strengthening the physical resources available for agricultural research;
- providing institutions with the means to develop, apply and follow up agricultural policy and programmes;
- intensifying and diversifying production in order to reinforce food security, improve the nutritional situation, permit import substitution and increase exports;
- ensuring environmentally supportable agricultural growth;
- development of human resources in the agricultural sector;
- management and collection of statistical data for use in agricultural planning;
- adequate support to the regional agricultural chambers that have been established so that they can strengthen their role in supporting farmers alongside the State, which will, in future, act only as a catalyst;
- introduction of a land-ownership policy which guarantees security of land tenure;
- improvement of storage infrastructure.
37. In this area, the Government has progressively been taking measures in the framework of the National Action Plan for the Environment (PANE) with a view to improving the management of the environment and promoting environmentally sound economic and social development.
38. To achieve this overall goal, environmental policy aims at:
- Strengthening national environmental management capacities through public and private agencies and non-governmental organizations;
- ensuring that environmental concerns are given due consideration in the planning and management of economic and social development;
- promoting sound and sustainable development of natural resources and the environment while improving living conditions and standards;
- strengthening the movement towards subregional integration and international cooperation in order to ensure coordinated management of shared or cross-border resources.
39. In the field of trade, in particular, strategies will focus on:
- Drawing up and implementing environmental rules and standards aimed at avoiding the consumption and use of products that are harmful to health and the environment;
- review the price structure of gas to make it accessible to the majority of citizens at prices comparable to those of neighbouring countries, thereby reducing the pressure on ligneous resources;
- promoting the consumption of petroleum products that are less harmful to the environment.
40. Together with agriculture and trade, industry represents Togo's long-term economic potential.
41. It is currently limited to the manufacturing sector, which is relatively recent. Industrial plants are for the most part concerned with agro-industry, apart from the first phosphate mining plant.
42. After suffering greatly from the political crisis, industry is now tending to pick up once again.
43. To encourage this revival, emphasis will be placed on certain priority measures connected with:
- Promotion of the private sector and creation of the "Maison de l'industrie" and the single window;
- development and improvement of industrial infrastructure providing a more favourable environment for investment both in the tax-free zone and the customs territory;
- introduction of a regulatory framework providing greater incentives;
- institutional support for industrial development structures.
44. In addition to the working of phosphate deposits, which play a dominant role in the country's economy, accounting for approximately 50 per cent of export earnings, Togo is not really a mining country, despite the existence of significant deposits of iron, chromite, manganese, etc.
45. The main element of the policy to be conducted with a view to promoting the mining sector are the following:
- Diversification of mining export products;
- strengthening of the human and physical resources of the General Directorate of Mining and Geology;
- encouragement of foreign investment by establishing incentives to stimulate exploration activities in Togo through the introduction of a new mining code;
- promotion of non-industrial mining and by creating incomes for small-scale miners.
46. After having applied de facto the General Agreement on Tariffs and Trade (GATT) 1947 during the colonial period, Togo became a contracting party, or de jure member, of the GATT on 20 March 1964.
47. Since it had no representation in Geneva, Togo followed GATT activities at a distance, either through its ambassadors in one of the countries neighbouring Switzerland, or through its fairly frequent information missions.
48. In the circumstances, Togo, like the African LDCs in general, was practically absent from the Uruguay Round of multilateral trade negotiations, and it did not participate in the formal signing ceremonies of the Final Act of the Uruguay Round which took place on 15 April 1994 in Marrakesh (Morocco).
49. However, in addition to its general efforts to liberalize economic and trade activities since the 1980s, Togo also signed the Uruguay Round Final Act on 9 August 1994 in Geneva. Its schedules of concessions (bindings) and specific commitments in the field of services were drawn up and transmitted to the WTO in April 1995.
50. Upon presentation of the Uruguay Round Agreement and the WTO framework by the Minister responsible for trade, the National Assembly deliberated and adopted, on 11 April 1995, the bill authorizing the ratification of the Agreement Establishing the WTO. This authorization came into effect under Law No. 95-013/ER of 19 April 1995 promulgating the Agreement. Through these formalities, Togo became an original Member of the WTO on 31 May 1995.
- Adapt trade regulations and activities to the requirements of international trade and take full advantage of the opportunities offered.
- Master and implement its notification obligations.
- Conduct a periodic retrospective analysis, at the international level, of its trade policy which must be adapted to domestic needs in terms of sustainable socioeconomic development and to the requirements of international trade in the context of globalization: to that end, Togo submitted its request to the WTO for a first trade policy review, the process which is now under way.
- Take full advantage of the integrated framework for trade-related technical assistance to the LDCs. On the occasion of the High-Level Meeting organized by the WTO, UNCTAD, ITC, UNDP, IMF and the World Bank on 27 and 28 October 1997 in Geneva for the purpose of designing this framework, Togo prepared and submitted to the WTO an overall assessment of its general technical assistance needs. The above-mentioned international organizations prepared a preliminary document containing integrated replies, and Togo will have to prepare observations concerning the proposed replies before the round table scheduled to produce an overall assessment of the needs expressed and the replies given before their implementation: this process is currently under way.
- Increase familiarity with the Uruguay Round Agreements and the WTO framework in Togo. While the Uruguay Round Agreements and the WTO framework are relatively well known among governmental and para-governmental institutions and in the private sector in Togo, there is a real need for assistance in ensuring that the Uruguay Round Agreements are better understood and the WTO better known in the country. A national seminar on the subject will be necessary.
- Hold periodic information seminars on the Uruguay Round Agreement and on the WTO, and on their implications, their challenges, their advantages and on ways of reducing the downside risk, in certain cases, and in others of maximizing the chances of deriving benefits. A seminar has been requested in this connection, and was scheduled for February 1998. However, it has been postponed, and will have to be rescheduled.
- Complete the impact assessment of the Uruguay Round Agreements on the Togolese economy. Programmed by UNCTAD, this study is currently being conducted by an international expert and a national expert, a professor in the Faculty of Economics and Management (FASEG) of the University of Benin (UB). This study should make it possible for Togo to identify the constraints and the advantages of these Agreements and the ways of managing them by scaling down the challenges and taking advantage of the opportunities offered. However, the work is still in a preliminary stage and the timetable will have to be reviewed.
- Take advantage of the technical assistance provided in respect of access to trade information through the Internet. Togo, and in particular the Ministry of Trade, are now able to use a reference centre on the multilateral trading system following the installation of a computer and other accessories giving them access to information sources available on the Internet and CD-Roms. This assistance is to be strengthened through the supply of further equipment.
- Take advantage of the "Maison universelle" proposed by Switzerland in the framework of the WTO Headquarters Agreement in Geneva, whose facilities will help the LDCs that wish to keep permanent missions to the international organizations in Geneva.
- Identify and take advantage of the export and market access opportunities for goods and services.
- Enhance national skills in managing the Uruguay Round Agreements and in the field of WTO trade policy in general.
- Put technical assistance to use in identifying the challenges and opportunities of globalization with a view to overcoming the former and taking full advantage of the latter.
- Maintain and respect the tariff bindings agreed and the specific commitments made in the field of services.
51. Import and export licences, prohibitions and quotas having been eliminated (see III.(1)(v), III.(1)(vi) and III.(1)(vii) for details), the import and export regime now boils down to the conditions, procedures and time required for import and export. These elements relate to banking transactions and formalities imposed by the port of unloading or shipment, customs and the tax authorities.
52. As regards phosphates still subject to import licensing, conditions and procedures also relate to banking transactions, the obtention of licences from the Ministry of Trade, and customs and port shipment formalities. In such cases, licences are delivered within a period of approximately 48 hours.
53. Since the liberalization of trade in goods, no imports or exports are subject to absolute prohibition or quantitative restriction.
54. However, the import of products considered hazardous, in particular arms and ammunition, explosives and military equipment, as well as narcotics, is strictly controlled
55. These restrictions are justified for security reasons in the case of arms, ammunition, explosives and military equipment. In the case of narcotics, they are justified on health, moral and social grounds.
56. As regards pharmaceuticals and hygiene products, Togo does not prohibit their entry into its market.
57. There is no list of prohibited products. However, there are regulated products, such as psychotropic substances and products that are temporarily prohibited because of their proven toxicity.
The export of local industrial products, cereals and other foodstuffs may be temporarily suspended to safeguard domestic consumption in the event of shortages. Back to top