Covid-19: Economic impacts on Togo and other WAEMU members (Study)
Thursday, 09 April 2020 12:12 
(Togo First) - While early forecasts for 2020 were relatively optimistic, everything has changed with the coronavirus pandemic all over the world. As a result, Africa and more specifically West Africa is forced to lower its expectations in terms of economic growth.
According to a recent study by Bloomfield Investment, it is said that growth in the WAEMU States - that includes Togo, Benin, Burkina Faso, Côte d’Ivoire, Senegal, Mali, Niger, and Guinea Bissau- could reduce by 50%.
The Togolese minister of finance, Sani Yaya, has recently aligned with the grim project saying: “Activity has slowed down, and the economic growth rate will surely be impacted. It could be reduced by half.”
Togo, it should be recalled, expected a growth rate of about 5.3% in 2020. However, given the actual context, the forecast was downscaled to between 2.1% and 2.5%. This breaks the good pace that the country had started in 2017.
Impact in WAEMU
According to the study’s authors, the WAEMU countries should be affected in four major areas: international trading, remittances, local economy, and public finances.
“Most countries in the area export mainly commodities,” and their main buyers are Europe (44.1%), Africa (21.6%), Asia (20.5%) and America (7.9%). Bloomfield predicts that the fall in demand will be felt on both sides.
Cotton: Togo a little less exposed than neighbors
In 2018, cotton made up 10% of Togo’s export making it the country’s second export product. Compared to Benin, it should thus be less impacted by the sharp drop in the prices of the crop. In 2018, cotton exports represented 56.9% of Benin’s overall exports and this exposes the nation to the price drop the most.
Let's recall that Togo had set to produce 200,000 t of cotton by 2022 - an objective that could be hampered in the current context.
Lower remittances
“Remittances to the WAEMU zone should fall,” according to Bloomfield. Given their size, this could indirectly increase the impact of the Covid-19 on the zone’s countries.
For example in 2018, the transfers from the diaspora represented respectively 7.7%, 10% and 5.5% of the GDPs of Togo, Senegal, and Mali.
Between 2007-2017, Togo captured 9.4% of remittances coming from the European Union (which is near recession at the moment), coming ahead of Côte d’Ivoire (6.6%), but far behind Mali (19.7%) and Senegal (47.6%).
Lower public revenues vs. external debt
As economic activity slows down, a fall in budget revenues (tax and customs) will undoubtedly follow whilst the debt burden is going to be felt more than ever.
Togo, in this regard, is one of the countries that are most exposed to the resulting pressure according to the study; as 65% of public resources, excluding grants, are used to service its debt (IMF estimates). Besides Togo, the two other WAEMU States that are most exposed are Burkina Faso (42.9%) and Benin (46.2%).
Let it be recalled that it is with this concern in mind that the World Bank and IMF recently asked official bilateral creditors to suspend debt payment for the most vulnerable countries.
