Togo has experienced a series of violent anti-government protests in recent months, which will raise death and injury risks for foreign investors. The government is also likely to suspend internet access prior to any scheduled protests. Recent infrastructure spending has elevated Togo’s debt levels, although engagement with the International Monetary Fund (IMF) should moderate sovereign credit risks in the coming years.
Regular anti-government protests have been organised in recent months in Togo, with participants demanding the resignation of President Faure Gnassingbé and the reinstatement of the 1992 constitution, which included a two-term presidential limit. Whilst the ruling Union for the Republic (UNIR) party proposed a reform bill which would reintroduce the limits in September 2017, many opposition and civil society groups are sceptical that the measures will be introduced. Protests have been concentrated in Lomé and Sokodé and have often been violent, as the security services respond with water cannons and live ammunition. On 17 October 2017, at least three people were killed in civil unrest following the arrest of a religious leader with links to the opposition. Protestors set up barricades in Sokodé and Bafilo and set fire to UNIR headquarters.
Protests are likely to continue in coming months, and will likely cause traffic disruption in urban centres Disrupted internet access is also likely – in September 2017 the government shutdown the internet for 6 days ahead of proposed protests. Foreign nationals will face elevated death and injury risks if they are caught up in incidents.
In May 2017, the International Monetary Fund (IMF) approved a three-year USD 241.5 million Extended Credit Facility (ECF), with USD 34.5 million available for immediate disbursement. Designed to enhance macroeconomic stability in Togo, the ECF will moderate sovereign credit risks over the three year period.
In recent years, the government has ramped up investment in infrastructure projects, including the expansion of Lomé port, and in doing so has significantly expanded its debt burden. In 2016, government debt reached 80.8% of GDP from 48.6% in 2011. Under the terms of the ECF, the Togolese government will be required to rein in capital spending and this should stabilise the fiscal and debt position. However, slowing fixed investment will also moderate economic growth. Real GDP is forecasted to grow by 4.8% in 2017, down from 5.1% in 2016.
Continued social unrest will pose downside risks to the Togolese economy, as heavy-handed responses by the security services may drive cutbacks in aid. Between 1993 and 2006 the European Union suspended aid to Togo as a result of unrest and illegitimate constitutional amendments. In 2016, foreign aid formed 13% of GDP, and any cutbacks would place renewed pressure on Togo’s fiscal and debt position.
Investment in critical infrastructure has improved the operating environment in Togo. In particular, a new USD 192.4 million 100 MW triple-fuel power plant, financed by US firm ContourGlobal, should stop power shortages in the country and support further foreign investment in the country.
Private sector investment is likely in Togo’s phosphate mining sector. In 2015, Israeli-firm Elenilto was awarded a tender to develop a USD 14 billion phosphate mine close to Lomé with an estimated 2 billion tons of phosphate.
The government has enhanced the legal and regulatory environment for mining projects since 2013, introducing greater transparency in the procurement process. As a result, Togo was registered as compliant with the Extractive Industries Transparency Initiative in May 2013.
Despite growing investment opportunities, foreign firms will continue to face elevated corruption levels. Togo has an entrenched patronage system, as northern elites distribute funds to maintain their hold on power.
Few steps have been taken to tackle corruption in the country and foreign investors will continue to face widespread graft in the coming years.
In this month's Risk Outlook, we also provide a detailed forward looking assessment of developments within the security, trading and investment environments for Spain, Guinea, Indonesia, and United Arab Emirates, all of which have been the subject of recent enquiries from JLT's client base.
The monthly Risk Outlook is supported by JLT’s proprietary country risk rating tool, World Risk Review (WRR) which provides risk ratings across nine insurable perils for 197 countries. The country risk ratings are generated by a proprietary, algorithm-based modelling system incorporating over 200 international sources of data.
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For further information, please contact Eleanor Smith, Political Risk Analyst on +44 (0)121 626 7837 or email email@example.com