Foreign direct investment (FDI) in Togo

FDI in Figures

According to UNCTAD's World Investment Report 2024, FDI flows to Togo stood at only USD 34 million in 2023, compared to a cumulative negative inflow of USD -368 million registered in the three previous years. At the end of the same period, the total stock of FDI was estimated at USD 1.47 billion, around 16.2% of the country’s GDP. The sectors that traditionally attract the most foreign investment are phosphates, cotton, infrastructure, coffee, and cocoa. South Africa, Qatar, the Netherlands, France, and Germany are the main investors (IMF). According to data recently published by the Permanent Secretariat for Monitoring Reform Policies and Financial Programs, as of the end of 2024, the Investment Approval Committee in Togo has validated 37 investment projects totalling XOF 237 billion. Of these projects, 12 were approved under the Free Zone regime, 22 under the Investment Code, and 3 under the specific Free Zone status for textiles and clothing. Among the investments, 22 are from foreign investors, focusing mainly on the construction, agro-industry, and agro-food sectors, accounting for XOF 156 billion, or 66% of the total approved investment.

The Lomé Port is a major asset for Togo. It is one of the largest ports in the region, turning the country into a trade hub. Togo has implemented a strategy to digitize and automate tax payment and business creation procedures. Recent reforms also include the implementation of a single window for investment, the reduction of the minimum capital for the creation of a company as well as the reduction of the costs of obtaining a building permit. Under the 2019 Investment Code, there are no general restrictions on foreign ownership or control. Both foreign and domestic private entities are allowed to establish and fully own business enterprises and engage in remunerative activities. Foreign investors can create wholly owned subsidiaries without the need to partner with local investors. Furthermore, there are no formal approval processes for inbound foreign investment, nor are there any specific rules, restrictions, or requirements imposed on private investments. The country has improved the monitoring and regulation of power outages by recording data on the annual Average System Outage Duration Index (SAIDI) and the System Average Interruption Frequency Index (SAIFI). However, efforts are still needed in terms of protection of minority investors, execution of contracts, resolution of problems related to insolvency, and simplification of the system of payment of taxes. Corruption, lack of skilled workforce, threat to maritime trade by Gulf of Guinea piracy, and exposure to terrorist activity in the Sahel region are potential barriers to investments. Overall, Togo ranks 117th among the 133 economies on the Global Innovation Index 2024 and 132nd out of 184 countries on the latest Index of Economic Freedom.

What to consider if you invest in Togo

Strong Points

Togo has several assets that could make it an attractive destination for FDIs:

• Mineral (phosphate, limestone and clay transformed into clinker) and agricultural (coffee, cocoa, cotton) resources
• A strategic location for trade with the rest of Africa, Europe and the North and with the potential to become a regional hub (the port of Lomé being the only deep-water port in West Africa)
• A relatively modern transportation infrastructure, with public and private investment in the sector
• Structural reforms underway (public finances, banking system, phosphate and cotton sectors)
• Member of regional organisations such as WAEMU and ECOWAS
• Presence of Export Free Zone (EFZ) which provide incentives to new companies
• Currency stability (CFA franc is pegged to the Euro)
• Nationwide availability of fibre to connect businesses locally and internationally

Weak Points

Several factors still hinder FDI inflows to Togo:

• High levels of poverty (46.2% in 2020 - World Bank) and unemployment
• Inadequate education and public health infrastructure
• A weak and opaque legal system, with a lack of clear land titles and government interference in various sectors
• A difficult business climate and high risks of corruption
• Frequent socio-political tensions
• Lack of agricultural infrastructure (in terms of storage, processing or irrigation)

Government Measures to Motivate or Restrict FDI

The government of Togo has highlighted the need for the country to boost its business climate in order to attract more FDIs. To this extent, foreign investors are granted the same rights as local ones. Indeed, in 2019, the Investment Code was adopted. The latter stipulates equal treatment between Togolese and foreign companies and investors, free management and free movement of capital for foreign investors and respect for private property.
The majority of incentives are given to the companies in the export free zones, including a tax exemption for the first 10 years (and a rate of 15% from the eleventh year); exemption from all duties and taxes when exporting products imported or manufactured in the free zone, and on import of raw materials as well as machinery and plant equipment; preferential tariffs on utility services (electricity, water, telephone); free transfer of capital; tax exemption on dividends during the first ten years for non-Togolese shareholders; protection against nationalisation of the property of foreign investors; etc.
The Togolese government created the Business Climate Unit (CCA) in 2017. It aims to coordinate economic reforms and play a key role in improving the business climate for the private sector.