2017 Index of Economic Freedom

Togo

overall score53.2
world rank138
Rule of Law

Property Rights33.8

Government Integrity36.8

Judicial Effectiveness39.9

Government Size

Government Spending79.8

Tax Burden68.2

Fiscal Health45.1

Regulatory Efficiency

Business Freedom50.3

Labor Freedom46.2

Monetary Freedom77.5

Open Markets

Trade Freedom71.3

Investment Freedom60.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 7.2 million
  • GDP (PPP):
    • $10.8 billion
    • 5.3% growth
    • 5.4% 5-year compound annual growth
    • $1,483 per capita
  • Unemployment:
    • 7.7%
  • Inflation (CPI):
    • 1.8%
  • FDI Inflow:
    • $52.7 million
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Togo has undertaken a series of economic reforms in recent years, restructuring its key banking, electricity, and transportation sectors. The corporate tax rate, formerly one of the region’s highest, has been lowered. The government has also taken steps to divest public enterprises. There are plans to privatize inefficient public banks.

However, an inefficient business environment and weak public administration continue to undermine overall competitiveness. A significant proportion of economic activity occurs in the informal sector. Togo still depends heavily on foreign aid. Foreign direct investment is allowed only in certain sectors, and regulatory and judicial systems are vulnerable to corruption and political interference.

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Background

Togo’s military appointed Faure Gnassingbé to the presidency in 2005 following the death of his father, who had ruled for nearly 40 years. Under pressure from the Economic Community of West African States and the African Union, he stepped down two months later, but he won the subsequent presidential election in April 2005. In 2012, Gnassingbé dissolved the ruling Rally of the Togolese People party and formed the Union for the Republic, which still dominates the political landscape. In April 2015, he secured a third five-year term. With one of West Africa’s few natural deep-water ports, Togo’s secure territorial waters have become a relatively safe zone for international shippers.

Rule of LawView Methodology

Property Rights 33.8 Create a Graph using this measurement

Government Integrity 36.8 Create a Graph using this measurement

Judicial Effectiveness 39.9 Create a Graph using this measurement

Protection of real property is frequently contentious; the relevant statutes are comprised of poorly defined mixtures of civil code and traditional laws and can lead to legal fights over inheritances. Despite some recent reforms, property registration is still very cumbersome. Contracts are difficult to enforce. The opaque judicial system lacks resources and is heavily influenced by the presidency. Graft and corruption remain serious problems.

Government SizeView Methodology

The top individual income tax rate is 45 percent, and the top corporate tax rate is 27 percent. Other taxes include a value-added tax and a property tax. The overall tax burden equals 20.7 percent of total domestic income. Government spending has amounted to 26 percent of total output (GDP) over the past three years, and budget deficits have averaged 5.4 percent of GDP. Public debt is equivalent to 61.9 percent of GDP.

Regulatory EfficiencyView Methodology

Recent reforms to enhance the entrepreneurial environment have reduced the time and cost involved in launching a business. The labor market lacks dynamism, and informal labor activity remains substantial. In 2016, lower oil prices allowed the government to reduce fuel subsidies, but these subsidies remain a burden on the budget and are expected to rise in the medium term as international oil prices increase.

Open MarketsView Methodology

Trade is extremely important to Togo’s economy; the value of exports and imports taken together equals 107 percent of GDP. The average applied tariff rate is 9.4 percent. Foreign ownership of land is restricted; otherwise, foreign and domestic investors are generally treated equally under the law. Capital transactions are subject to some controls or government approval. Despite progress, the underdeveloped banking system lacks liquidity.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius74.70.0
2Botswana70.1-1.0
3Rwanda67.64.5
4Côte d'Ivoire 633.0
5Namibia62.50.6
6South Africa62.30.4
7Seychelles61.8-0.4
8Swaziland61.11.4
9Uganda60.91.6
10Burkina Faso59.60.5
11Benin59.2-0.1
12Mali58.62.1
13Gabon58.6-0.4
14Tanzania58.60.1
15Madagascar57.4-3.7
16Nigeria57.1-0.4
17Cabo Verde56.9-9.6
18Democratic Republic of Congo56.410.0
19Ghana56.2-6.8
20Guinea-Bissau56.14.3
21Senegal55.9-2.2
22Comoros55.83.4
23Zambia55.8-3.0
24São Tomé and Príncipe 55.4-1.3
25Mauritania54.4-0.4
26Lesotho53.93.3
27Kenya53.5-4.0
28The Gambia53.4-3.7
29Togo53.2-0.4
30Burundi53.2-0.7
31Ethiopia52.71.2
32Sierra Leone52.60.3
33Malawi52.20.4
34Cameroon51.8-2.4
35Central African Republic51.86.6
36Niger50.8-3.5
37Mozambique 49.9-3.3
38Liberia49.1-3.1
39Chad492.7
40Sudan48.8N/A
41Angola48.5-0.4
42Guinea47.6-5.7
43Djibouti46.7-9.3
44Equatorial Guinea451.3
45Zimbabwe445.8
46Eritrea42.2-0.5
47Republic of Congo 40-2.8
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