Economy

Togo's small sub-Saharan economy is heavily dependent on both commercial and subsistence agriculture, which provides employment for 65% of the labour force. Cocoa, coffee, and cotton together generate about 30% of export earnings. Togo is self-sufficient in basic foodstuffs when harvests are normal, with occasional regional supply difficulties. In the industrial sector, phosphate mining is by far the most important activity, although it has suffered from the collapse of world phosphate prices and increased foreign competition. Togo's GNI per capita in 2005 was US $380.

Togo serves as a regional commercial and trade centre. The government's decade-long effort (supported by the World Bank and the IMF) to implement economic reform measures, encourage foreign investment, and bring revenues in line with expenditures, has stalled. Political unrest, including private and public sector strikes throughout 1992 and 1993, jeopardised the reform program, shrank the tax base and disrupted vital economic activity. The 12 January 1994 devaluation of the currency by 50% provided an important impetus to renewed structural adjustment; these efforts were facilitated by the end of strife in 1994 and a return to overt political calm. Progress depends on increased openness in government financial operations (to accommodate increased social service outlays) and possible downsizing of the military, on which the regime has depended to stay in place.

Agriculture

Subsistence agriculture is the main economic activity in Togo, with the majority of the population depending on it. Food and cash crop production employs the majority of the labour force and contributes about 42% to the gross domestic product (GDP). Coffee and cocoa are traditionally the major cash crops for export, but cotton cultivation increased rapidly in the 1990s, with 173,000 metric tons produced in 1999.

After a disastrous harvest in 2001 (113,000 metric tons), production rebounded to 168,000 metric tons in 2002. Despite insufficient rainfall in some areas, the Togolese Government has achieved its goal of self-sufficiency in food crops: maize, cassava, yams, sorghum, millet and groundnut. Small and medium-sized farms produce most of the food crop, with the average farm size being one to three hectares.

Commerce

Commerce is an important economic activity in Togo, and Lome is an important regional trading centre. Its port operates 24 hours a day, mainly transporting goods to the inland countries of Mali, Burkina Faso and Niger.

Lome's "Grand Marche" is known for its entrepreneurial market women, who have a stronghold over many areas of trade, particularly in African cloth. In addition to textiles, Togo is an important centre for re-export of alcohol, cigarettes, perfume, and used automobiles to neighbouring countries. Recent years of political instability have, however, eroded Togo's position as a trading centre.

Industry

In the industrial sector, phosphates are Togo's most important commodity, and the country has an estimated 60 million metric tons of phosphate reserves. From a high point of 2.7 million tons in 1997, production dropped to approximately 1.1 million tons in 2002. The fall in production is partly the result of the depletion of easily accessible deposits and the lack of funds for new investment. The formerly state-run company appears to have benefited from private management, which took over in 2001. Togo also has substantial limestone and marble deposits.

Encouraged by the commodity boom of the mid-1970s, which resulted in a four-fold increase in phosphate prices and sharply increased government revenues, Togo embarked on an overly ambitious program of large investments in infrastructure while pursuing industrialisation and development of state enterprises in manufacturing, textiles and beverages. However, following declines in world prices for commodities, its economy became burdened with fiscal imbalances, heavy borrowing and unprofitable state enterprises.

Togo turned to the International Monetary Fund (IMF) for assistance in 1979, while simultaneously implementing a stringent adjustment effort with the help of a series of IMF standby programs, World Bank loans and Paris Club debt rescheduling. Under these programs, the Togolese Government introduced a series of austerity measures and major restructuring goals for the state enterprise and rural development sectors. These reforms were aimed at eliminating most state monopolies, simplifying taxes and customs duties, curtailing public employment and privatising major state enterprises. Togo made good progress under the international financial institutions' programs in the late 1980s, but movement on reforms ended with the onset of political instability in 1990. With a new, elected government in place, Togo negotiated new 3-year programs with the World Bank and IMF in 1994.

Togo returned to the Paris Club in 1995 and received Naples terms, the club's most concessionary rates. With the economic downturn associated with Togo's political problems, scheduled external debt service obligations for 1994 were greater than 100% of projected government revenues (excluding bilateral and multilateral assistance). By 2001, Togo was embarked on an IMF Staff Monitored Program designed to restore macroeconomic stability and financial discipline but without any new IMF resources pending new legislative elections. New IMF, World Bank and Africa Development Bank (ADB) lending had to await the willingness of Togo's traditional donors - the European Union, principally, but the US also - to resume aid flows, but Togo's problematic legislative and presidential elections and the government's unwillingness to transition from an Eyadéma-led autocracy to democracy deterred these donors from providing Togo with more aid. In the autumn of 2002, Togo was $15 million in arrears to the World Bank and owed $3 million to the ADB.

Togo is one of 16 members of the Economic Community of West African States (ECOWAS). The ECOWAS development fund is based in Lome. Togo also is a member of the West African Economic and Monetary Union (UEMOA), which groups seven West African countries using the CFA franc. The West African Development Bank (BOAD), which is associated with UEMOA, is based in Lome. Togo long served as a regional banking centre, but that position has been eroded by the political instability and economic downturn of the early 1990s. Historically, France has been Togo's principal trading partner, although other European Union countries are important to Togo's economy. Total U.S. trade with Togo amounts to about $16 million annually.