2013 Index of Economic Freedom

Togo

overall score48.8
world rank150
Rule of Law

Property Rights30.0

Freedom From Corruption24.0

Limited Government

Government Spending81.6

Fiscal Freedom68.5

Regulatory Efficiency

Business Freedom39.9

Labor Freedom44.2

Monetary Freedom78.5

Open Markets

Trade Freedom56.7

Investment Freedom35.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 7.1 million
  • GDP (PPP):
    • $6.4 billion
    • 4.1% growth
    • 3.2% 5-year compound annual growth
    • $899 per capita
  • Unemployment:
  • Inflation (CPI):
    • 3.6%
  • FDI Inflow:
    • $53.8 million
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Togo’s economic freedom score is 48.8, making its economy the 150th freest in the 2013 Index. Its score is 0.5 point higher than last year, reflecting notable improvements in investment freedom and business freedom. Togo is ranked 35th out of 46 countries in the Sub-Saharan Africa region, and its overall score is well below the world and regional averages.

Economic freedom continues to be repressed in Togo, and only patchy progress has been achieved in economic reform. Institutional weaknesses and poor policy choices undermine macroeconomic stability and poverty reduction. In particular, the rule of law remains fragile due to corruption and an inept judicial system that is subject to political interference.

Economic expansion, driven mainly by agricultural exports, has averaged about 3 percent per year for the past five years. However, sustaining steady growth will be challenging because of the lack of economic dynamism. Togo’s economy remains highly vulnerable to external shocks, and the inefficient regulatory environment continues to constrain commercial operations and investment. The underdeveloped financial sector remains fragmented, reflecting the small size of the formal economy.

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Background

In 2005, the military appointed Faure Gnassingbé to the presidency following the death of his father, who had ruled for 38 years. Faced with condemnation and sanctions by the Economic Community of West African States and the African Union, he stepped down and called for an election, which he won. The whole process was widely viewed as flawed. Legislative elections, judged relatively free and fair, were held in 2007, and Gnassingbé was re-elected in March 2010 in elections regarded as legitimate. Togo has assumed a nonpermanent seat on the U.N. Security Council for the 2012–2013 term. Togo is the world’s fourth-largest producer of phosphate. Cocoa, coffee, and cotton generate about 40 percent of export earnings, and cotton is the most important cash crop. Services, especially re-exports from the Lomé port facility, are also important.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 24.0 Create a Graph using this measurement

The judicial system is vulnerable to strong influence from the executive and does not provide independent protection of private property. Contracts are difficult to enforce. Because inheritance laws are poorly defined, ownership of physical property is frequently disputed. Togo has a large informal market in pirated optical media, computer software, and counterfeit products. Corruption is pervasive at all levels of government.

Limited GovernmentView Methodology

The top income tax rate is 45 percent, and the top corporate tax rate is 30 percent. Other taxes include a value-added tax (VAT) and a property tax. The overall tax burden equals 15.1 percent of total domestic income. Government spending is equivalent to 24.8 percent of total domestic output. The budget deficit continues to increase, but public debt has fallen precipitously to 30.8 percent of GDP due to cancellations of official external debt.

Regulatory EfficiencyView Methodology

Recent reforms to enhance the entrepreneurial environment have reduced the time and cost involved in launching a business, but the overall business framework remains quite burdensome. It takes 38 days to start a company, and the minimum capital requirement costs over three times the level of average annual income. The labor market is underdeveloped, and informal labor activity remains substantial. Inflation is moderate.

Open MarketsView Methodology

The trade-weighted average tariff rate is prohibitively high at 14.2 percent, and onerous non-tariff barriers further increase the cost of trade. A new investment code adopted in 2012 provides for equal treatment of domestic and foreign investors, but investment is allowed only in certain sectors and is screened case by case. Capital transactions are subject to some controls or government approval. The underdeveloped banking system lacks liquidity.

Country's Score Over Time

Bar Graph of Togo Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Togo to other economic country groups

Regional Ranking

rank country overall change
1Mauritius76.9-0.1
2Botswana70.61.0
3Rwanda64.1-0.8
4Cape Verde63.70.2
5Madagascar62-0.4
6South Africa61.8-0.9
7Ghana61.30.6
8Uganda61.1-0.8
9Namibia60.3-1.6
10Burkina Faso59.9-0.7
11The Gambia58.80.0
12Zambia58.70.4
13Tanzania57.90.9
14Gabon57.81.4
15Benin57.61.9
16Swaziland57.20.0
17Mali56.40.6
18Kenya55.9-1.6
19Senegal55.50.1
20Malawi55.3-1.1
21Nigeria55.1-1.2
22Mozambique 55-2.1
23Seychelles54.91.9
24Côte d'Ivoire 54.1-0.2
25Djibouti53.90.0
26Niger53.9-0.4
27Cameroon52.30.5
28Mauritania52.3-0.7
29Guinea51.20.4
30Guinea-Bissau51.11.0
31Central African Republic50.40.1
32Ethiopia49.4-2.6
33Liberia49.30.7
34Burundi490.9
35Togo48.80.5
36Sierra Leone48.3-0.8
37São Tomé and Príncipe 48-2.2
38Lesotho47.91.3
39Comoros47.51.8
40Angola47.30.6
41Chad45.20.4
42Republic of Congo 43.5-0.3
43Equatorial Guinea42.3-0.5
44Democratic Republic of Congo39.6-1.5
45Eritrea36.30.1
46Zimbabwe28.62.3
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