The World Bank considers that Togo must continue its efforts in terms of attractiveness for the private sector. A few avenues: improve access to electricity and the Internet, review financing mechanisms, in order to confirm recent progress.
The World Bank Group has just granted 70 million dollars (38.9 billion CFA francs) to Togo. This sum will help the country to cross the air hole in its growth, strongly affected by the Covid-19 pandemic.
“This support is important to help Togo mitigate the effects of the pandemic on populations and execute the national post-Covid-19 recovery plan,” comments Hawa Cissé Wagué, resident representative of the World Bank for Togo.
According to whom, “the social protection and health measures supported by this operation should mitigate the impact of the effects of the crisis on the most vulnerable by supporting household consumption and guaranteeing access to basic services.”
The announcement of this support comes as the WB publishes a comprehensive report on Togo’s economic situation, Boosting private investment for more growth and jobs.
The institution welcomes the growth recorded in recent years, and invites the country to continue its efforts to support the private sector. The report is backed up by the results and comments of the WB after a survey of business leaders in Togo.
According to the optimistic scenario adopted, GDP growth would fall to 1% in 2020 (against 5.3% forecast at the start of the year) and rebound to 4% in 2021 and 5.5% in 2022. This growth would be driven by public investment in infrastructure and a revival of private investment due to recent reforms aimed at improving the business climate.
The quality of telecommunications infrastructure is a major constraint on business development. Efficient information and communication technologies (ICTs) “reduce transaction costs and promote connectivity and innovation in the market”.
Also, the WB regrets, in Togo, “the high cost and relatively mediocre services constrain businesses and limit the leverage effect and the spinoffs that the ICT sector can create”.
The crisis can become an opportunity!
Private investment is essential to the achievement of the PND (National Development Plan) 2018-2022. They have certainly increased over the past ten years, but remain “well below” the levels necessary to achieve the objectives of the Plan.
The PND assumes an annual increase in private investment of 17% over the period 2018-2022 while it only increased by 11% per year between 2010 and 2018. However, Togo’s recent performance in terms of the improvement of the business climate suggests the existence of political will and an environment conducive to the acceleration of private investments.
Despite its challenges and its economic, human and social cost, the Covid-19 crisis provides an opportunity to redeploy energies towards building a dynamic and resilient private sector, judges the World Bank.
Which sets an agenda for reforms around three essential axes. Building resilience; lifting of structural constraints to the development of a productive private sector; targeted measures for optimizing the performance of the priority sectors of the PND.
Regarding the resilience objective, the WB recommends accelerating the digitization of the economy, in order to ensure the continuity of public administration and economic activity in times of crisis.
The action can also be improved by strengthening the protection of the workforce through a social safety net mechanism. Finally, it is necessary to build an institutional, legal and infrastructural architecture of a public guarantee system for SMEs.
Above all, the health crisis reaffirms the need to remove the structural constraints weighing on the private sector. Togo must continue its efforts to facilitate access to finance, improve the quality and reduce the costs of access to electricity and telecommunications services (internet, mobile telephony). “It seems necessary to reduce the burden of taxation on companies and strengthen human capital.”
Referring to the priority sectors of the PND, the WB cites agriculture, logistics and transport, and the mining sector. “In agriculture, public investment in irrigation, improving and securing access to land ownership and securing access to inputs are key measures to guarantee a substantial increase in productivity. and job creation.”
Adapt to the job market!
In logistics and transport, it is important to strengthen the quality of the workforce and develop financing mechanisms, including leasing, for the renewal of the transport fleet.
In the mining sector, continuous improvement of the information system and strengthening of the legal framework relating to the procedures for granting land use rights and mining permits are essential to attract strategic investors to the sector. In addition, the functioning of Special Economic Zones could be improved.
In terms of increasing human capital, the BM considers that in order to be a factor in increasing productivity and creating jobs, “it is necessary to adapt to the dynamics of the labor market”.
This requires a prospective analysis which makes it possible to anticipate skills needs in the labor market in order to adapt educational paths accordingly.
In addition, for greater efficiency and consistency with the overall business climate reform agenda, it is important to carry out an assessment of the effectiveness of the tax incentives applied in the context of free zones and provided for in the framework of the investment code.
