(Togo First) - Seven months after putting in place a State-Private sector consultative committee, the government of Togo just launched the Business Climate Cell (CCA). The latter’s objective is to coordinate ministries’ efforts, in order to insure synergy and efficient follow-up in the implementation of reforms aimed at improving businesses in Togo.
The launching ceremony and validation of global action plan for business climate’s improvement took place January 30, 2018 at Sarakawa hotel in Lomé, in the presence of the Prime Minister, officials and various economic operators. According to M. Komi Selom Klassou, “improving business climate is a major challenge for a prosperous economic development”, in Togo.
In this framework, many reforms were initiated by the government to promote entrepreneurship, attract local and foreign investments, and improve Togo’s governance indicators in global rankings. The final objective being to achieve a strong growth, reduce poverty and improve living standards of the Togolese people.
Subsequent to the implementation of these reforms which have positioned Togo as a commercial and business tourism hub in West Africa, another battery of measures were recently implemented. Behind this move is Sandra Johnson, the national coordinator of the Business Climate Cell, who tells us more about what is being done to transform Togo and ease the lives of entrepreneurs in the country.

Togo First: The recent set of reforms initiated by Togo to ease business creation aims mainly youth and women. What are the sectors, according to you, that provide them with more opportunities?
Sandra Johnson: Youth and women operate mostly in the sectors of trade and agriculture, agricultural processing also. Though at a small scale, they show promising results which deserve to be backed. These two sectors are part of the government’s top priorities, especially knowing that 60% of the population is youth and 52% of this proportion are women. Additionally, data released by the Centre for Business Formalities (CFE) shows that more than 60% of businesses launched are in the trade sector. Finally, even history attests of this as is the case with the Nana Benz, in Togo, who were the first African women to specialize in the commercialization of Wax, a fabric that is symbolic of African women’s value.

TF: What is the role of the business climate cell in this framework?
SJ : The Business climate cell is a strategic tool, placed under the direct authority of the President of the Republic, whose mission is to coordinate ministries’ efforts towards a more synergetic and efficient government action, in regards to business climate’s improvement. So far, about ten reforms have been introduced over the past two months. These include the liberalization of minimum social capital for LLC creation, reduction of registration fees for ownership transfer, 30% reduction in cost associated with power connection. The cell will tightly collaborate with the State-Private sector consultative committee created in March 2017 and headed by the Prime Minister.

TF : In sight of the changes, have you already set a target regarding the number of companies you aim to create?
SJ : The main goal of these measures is to push young businesses to regularize in order to benefit from various incentives and advantages, such as funding mechanisms put in place by the State, in partnership with financial institutions. We hope to double the number of companies, mostly those that were subjected to registration fees and stamps, as well as to legal notices publishing. The cancellation of registration fees, valued at 2% of minimum capital in cash, and 4% as goods, should also encourage the firms that were still hesitant to regularize their situation.
Let it be noted that adopting the 2014 decree on LLC creation by private deed, with no notary fees, and with model statutes available on CFE’s website, helped create twice more LLCs, with more than 70% of those by private deed.

“The main goal of these measures is to push young businesses to regularize”

TF : What are, according to you, the most important reforms left to implement, to get more informal businesses to regularize?
SJ : All the necessary legal conditions are in place to support the private sector which still is, as we know, economic growth’s driver.
Another good news is the adoption of the bill on the new tax code which will come into effect starting from 2019. This was during a council of ministers held Feb. 1, 2018. Under the new code, corporate tax will be reduced from 28% to 27%, then 25%. Meanwhile, some other taxes and duties will be suppressed, such as wage tax, corporate vehicle tax, or additional tax on income duty. The new code also plans to get rid of surtax on insufficiently built properties, special tax on drinks sale and manufacturing and also of tax on road hauliers’ income.
In the meantime, reforms will keep being implemented in regards to trans-border trade with the reinforcement of the single desk and the upcoming adoption of an application decree for the law on electronic signature, contracts’ execution with the creation, in the short term, of commercial tribunals, access to loans and the establishment of a single land office, among others…

TF : After creating their company, young entrepreneurs often have issues securing financing from banks. Do you believe that Togolese banks are ready to support this government initiative?
SJ : Yes, truly, loan access is one of the many issues denounced by economic actors, and this is the reason for the adoption in 2016 of the law for the creation of the credit information bureau which opened last year. The long-term goal of this move is to bring banks to reduce interest rates on loans, as well as ease conditions for their provision. We hope that its impact will show in the coming months.

TF : Are you looking into setting other measures enabling the development of other funding alternatives (venture capital, crowdfunding, microfinance, development bank…)?
SJ : Indeed, many mechanisms have been put in place by the government, such as the national fund for inclusive finance (FNFI), the Youth Initiatives Support Fund (FAIEJ), the national agency for financing promotion and guarantee. However, more profound talks are underway to develop more adapted tools, or even launch a venture capital fund.

TF : In what way could these reforms attract more foreign direct investments?
SJ : This set of reforms which aims at facilitating the creation of businesses, reduce import delays, alleviating and even suppressing some taxes, adds up to other measures such as the implementation of an investment code that provides significant advantages to both foreign and local firms.

TF : Do you expect Togo’s ranking in the World Bank’s next Doing Business index to rise slightly?
SJ : Obviously, if adequate information is relayed to the Bank. Because, the cell, in the framework of the action plan’s elaboration, has decided to adopt the methodologic approach of the World Bank, which is based on case studies, and is acknowledged and considered as a scientific approach. This approach, based on the various challenges they encounter was completed by actors of the private sector, during the validation workshop held on January 30, 2018.

Interview by Fiacre E. Kakpo.