2014 Index of Economic Freedom

Togo

overall score49.9
world rank152
Rule of Law

Property Rights30.0

Freedom From Corruption23.8

Limited Government

Government Spending82.4

Fiscal Freedom69.7

Regulatory Efficiency

Business Freedom43.3

Labor Freedom42.8

Monetary Freedom79.3

Open Markets

Trade Freedom62.8

Investment Freedom35.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 6.3 million
  • GDP (PPP):
    • $6.9 billion
    • 5.0% growth
    • 4.0% 5-year compound annual growth
    • $1,096 per capita
  • Unemployment:
  • Inflation (CPI):
    • 2.6%
  • FDI Inflow:
    • $166.3 million
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Togo’s economic freedom score is 49.9, making its economy the 152nd freest in the 2014 Index. Its score has increased by 1.1 points since last year, reflecting improvement in half of the 10 economic freedoms including trade freedom, business freedom, and fiscal freedom. Togo is ranked 36th out of 46 countries in the Sub-Saharan Africa region, and its overall score is well below the world and regional averages.

Togo’s economic freedom was first assessed in the 1999 Index, and its score has improved since then by less than 2 points. Modest gains in market openness, regulatory efficiency, and freedom from corruption have been undermined by declines in the management of public finance. Togo’s economy has been rated “repressed” throughout the history of the Index. Its 2014 score is its highest in three years.

Sustaining steady growth remains challenging because of the lack of economic dynamism stemming from Togo’s patchy progress toward greater economic freedom. The economy remains highly vulnerable to external shocks, and the inefficient regulatory environment still constrains commercial operations and investment.

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Background

The military appointed Faure Gnassingbé to the presidency in 2005 following the death of his father, who had ruled for 38 years. Faced with sanctions by the Economic Community of West African States and the African Union, he stepped down two months later and called for an election, which he won. Legislative elections were held in 2007, and Gnassingbé was re-elected in 2010. Togo is the world’s fourth-largest producer of phosphate. Cocoa, coffee, and cotton generate about 40 percent of export earnings. Services, especially re-exports from the Lomé port facility, are also important. Agriculture employs 65 percent of the workforce. Togo completed the International Monetary Fund Extended Credit Facility in 2011, and 95 percent of its debt has been forgiven. It continues to work on IMF-designed reforms.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 23.8 Create a Graph using this measurement

Corruption is a serious problem, and providing cash or other gifts to expedite business transactions remains a common practice, reportedly shortening delays for obtaining registrations, permits, and licenses. 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. Ownership of physical property is frequently disputed.

Limited GovernmentView Methodology

The top individual income tax rate remains 45 percent, but the top corporate tax rate has fallen to 27 percent. Other taxes include a value-added tax (VAT) and a property tax. The overall tax burden amounts to 16.7 percent of the domestic economy. Government spending equals 24 percent of GDP. Public debt is 47 percent of gross domestic output. Improved tax collection has helped to ease the fiscal situation.

Regulatory EfficiencyView Methodology

Despite some progress, the overall business framework remains quite burdensome. It takes 19 days to start a company, and the minimum capital requirement costs over three times the level of average annual income. Completing licensing requirements takes more than four months on average. The labor market is underdeveloped, and informal labor activity remains substantial. The IMF reported in 2013 that fuel subsidies remain in effect.

Open MarketsView Methodology

Togo’s average tariff rate is 11.1 percent. Nearly 25 percent of government revenue is generated by tariffs. Foreign investors may find the legal and regulatory systems to be slow-moving and inefficient. The financial system is rudimentary, and a considerable portion of the population has no access to credit. The underdeveloped banking system lacks liquidity. Capital transactions are subject to some controls or government approval.

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
1Mauritius76.5-0.4
2Botswana721.4
3Cape Verde66.12.4
4Rwanda64.70.6
5Ghana64.22.9
6South Africa62.50.7
7Madagascar61.7-0.3
8Swaziland61.24.0
9Zambia60.41.7
10Uganda59.9-1.2
11The Gambia59.50.7
12Namibia59.4-0.9
13Burkina Faso58.9-1.0
14Gabon57.80.0
15Tanzania57.8-0.1
16Côte d'Ivoire 57.73.6
17Kenya57.11.2
18Benin57.1-0.5
19Seychelles56.21.3
20Djibouti55.92.0
21Mali55.5-0.9
22Malawi55.40.1
23Senegal55.4-0.1
24Niger55.11.2
25Mozambique 550.0
26Nigeria54.3-0.8
27Guinea53.52.3
28Mauritania53.20.9
29Cameroon52.60.3
30Liberia52.43.1
31Burundi51.42.4
32Comoros51.43.9
33Guinea-Bissau51.30.2
34Sierra Leone50.52.2
35Ethiopia500.6
36Togo49.91.1
37Lesotho49.51.6
38São Tomé and Príncipe 48.80.8
39Angola47.70.4
40Central African Republic46.7-3.7
41Chad44.5-0.7
42Equatorial Guinea44.42.1
43Republic of Congo 43.70.2
44Democratic Republic of Congo40.61.0
45Eritrea38.52.2
46Zimbabwe35.56.9
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