2018 Index of Economic Freedom

Togo

overall score47.8
world rank168
Rule of Law

Property Rights32.7

Government Integrity31.4

Judicial Effectiveness28.2

Government Size

Government Spending73.3

Tax Burden64.3

Fiscal Health7.5

Regulatory Efficiency

Business Freedom49.7

Labor Freedom45.2

Monetary Freedom78.5

Open Markets

Trade Freedom67.2

Investment Freedom65.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 7.5 million
  • GDP (PPP):
    • $11.6 billion
    • 5.3% growth
    • 5.5% 5-year compound annual growth
    • $1,550 per capita
  • Unemployment:
    • 6.8%
  • Inflation (CPI):
    • 0.9%
  • FDI Inflow:
    • $254.9 million
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Togo’s economic freedom score is 47.8, making its economy the 168th freest in the 2018 Index. Its overall score has decreased by 5.4 points, with very steep declines in fiscal health and judicial effectiveness overwhelming a higher score for the investment freedom indicator. Togo is ranked 41st among 47 countries in the Sub-Saharan Africa region, and its overall score is below the regional and world averages.

Political stability and government efforts to modernize the banking, electricity, and transportation sectors and other commercial infrastructure have enabled Togo to enjoy a period of steady growth. Corporate taxes have been cut and some public enterprises divested. However, an inefficient business environment and weak public administration continue to undermine overall competitiveness and drive a significant portion of economic activity into the informal sector. 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

French Togoland became Togo in 1960. General Gnassingbé Eyadema, installed as military ruler in 1967, remained in power for almost four decades. Faure Gnassingbé, appointed to the presidency by the military in 2005 following the death of his father, was elected to that office later that year. His Union for the Republic dominates the political landscape. In 2015, he secured a third five-year term. Thousands protested in 2017, demanding presidential term limits and Gnassingbé’s departure. The economy depends heavily on both commercial and subsistence agriculture, which employs about 60 percent of the labor force. Togo has one of West Africa’s few natural deep-water ports, and its secure territorial waters have become a relatively safe zone for international shippers.

Rule of LawView Methodology

Property Rights 32.7 Create a Graph using this measurement

Government Integrity 31.4 Create a Graph using this measurement

Judicial Effectiveness 28.2 Create a Graph using this measurement

Protection of real property is frequently contentious because of Togo’s poorly defined mix of civil and traditional laws. 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 is a serious problem. Officials frequently engage in corrupt practices with impunity.

Government SizeView Methodology

The top individual income tax rate is 45 percent, and the top corporate tax rate is 27 percent. Other taxes include value-added and property taxes. The overall tax burden equals 28.5 percent of total domestic income. Over the past three years, government spending has amounted to 29.8 percent of total output (GDP), and budget deficits have averaged 8.4 percent of GDP. Public debt is equivalent to 79.1 percent of GDP.

Regulatory EfficiencyView Methodology

Business-friendly reforms implemented in 2016 include reforms making it easier to pay taxes, resolve insolvency, and trade across borders. Access to credit was also improved. Large portions of the workforce are employed in the informal economy. No labor laws or regulations were enacted in 2016. Fuel subsidies have been streamlined, but they remain a burden on the budget, and subsidies on kerosene for vulnerable groups continue.

Open MarketsView Methodology

Trade is extremely important to Togo’s economy; the combined value of exports and imports equals 105 percent of GDP. The average applied tariff rate is 11.4 percent. Nontariff barriers impede some trade. Government openness to foreign investment is above average. Capital transactions are subject to some controls or government approval. The evolving banking system continues to expand but lacks liquidity.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius75.10.4
2Botswana69.9-0.2
3Rwanda69.11.5
4South Africa630.7
5Uganda621.1
6Côte d'Ivoire 62-1.0
7Seychelles61.6-0.2
8Burkina Faso600.4
9Cabo Verde603.1
10Tanzania59.91.3
11Namibia58.5-4.0
12Nigeria58.51.4
13Gabon58-0.6
14Mali57.6-1.0
15Guinea-Bissau56.90.8
16Madagascar56.8-0.6
17Benin56.7-2.5
18Comoros56.20.4
19Ghana56-0.2
20Swaziland55.9-5.2
21Senegal55.7-0.2
22Kenya54.71.2
23Zambia54.3-1.5
24Mauritania54-0.4
25Lesotho53.90.0
26São Tomé and Príncipe 53.6-1.8
27Ethiopia52.80.1
28The Gambia52.3-1.1
29Guinea52.24.6
30Democratic Republic of Congo52.1-4.3
31Malawi52-0.2
32Cameroon51.90.1
33Sierra Leone51.8-0.8
34Burundi50.9-2.3
35Liberia50.91.8
36Niger49.5-1.3
37Sudan49.40.6
38Chad49.30.3
39Central African Republic49.2-2.6
40Angola48.60.1
41Togo47.8-5.4
42Mozambique 46.3-3.6
43Djibouti45.1-1.6
44Zimbabwe440.0
45Equatorial Guinea42-3.0
46Eritrea41.7-0.5
47Republic of Congo 38.9-1.1
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