After imposing heavy sanctions on Mali, ECOWAS heads of state met on Friday to discuss the recent putsch in Burkina Faso, which led to the exit of Roch Marc Christian Kaboré. Unsurprisingly, they decided to suspend Burkina Faso from the sub-regional bodies. It is in this context of tensions between these two Sahel states and ECOWAS that we (Togo First), based on the latest economic data available, decided to review trade relations between Togo, Mali, and Burkina Faso. From trade and diaspora remittances to foreign direct investment (FDIs) and tourism, here, we look at all of it.  

In recent years, trade between Togo and its two Sahelian neighbors, Mali and Burkina, has grown steadily. That is a fact validated by data from both the BCEAO and the UN’s Comtrade aggregator.

Mali

In 2020, trade between Mali and Togo was estimated at CFA85 billion, with Togo selling more than it bought. Indeed, despite its size, Togo is Mali's third-largest supplier of goods in the WAEMU region, behind Senegal and Côte d'Ivoire. Fuel, fertilizers, basic food products, and pharmaceuticals ... Togolese exports to Mali stood at CFA75 billion in 2020, compared to about CFA10 billion for imports. 

Diaspora transfers

Remittances are another key component of economic relations between Togo and Mali. And just like in the case of trade, Togo seems to be winning on that ground as well.

In 2019, Malian migrant workers living in Togo sent CFA2.5 billion home (latest BCEAO figures). In the opposite direction, the Togolese diaspora living in Mali sent home CFA9.8 billion, almost four times more than the Malian diaspora did.

A source of FDI for Mali

Since 2017, foreign direct investments (FDIs) from Togo to Mali remained robust, year after year. Truly, except for 2020 when they dropped to CFA785 million, in part because of the pandemic, the FDIs stood above CFA3 billion over the period.

This year, Togo will allocate CFA4 billion to the Local Authority Support Fund (FACT) in line with its appropriation bill 2022. Compared to 2021, this is 36% lower. 

The amount allocated last year was broken down into CFA2.5 billion for projects carried out by the National Agency for Grassroots Development (ANADEB), and around CFA4 billion for the country’s 117 municipal councils. 

The FACT is a government-sponsored fund designed to support local authorities in mobilizing financial resources. It is backed by many technical and financial partners, such as GIZ, AFD, and the European Union (EU).

For example, in 2021, Germany and the EU provided 10 Togolese municipalities with modern premises and trained many municipal councilors on local governance. They did so via the Decentralization and Local Governance Program (ProDoGoL), in which they injected over CFA18 billion.

Esaïe Edoh

The Togolese subsidiary of the Compagnie Financière Africaine (COFINA) will reinforce its financial inclusion policy. This ambition was revealed on Jan 27 by the institution’s MD, Digbé Marcel, during an audience with Prime Minister Victoire Dogbé.

"We will accentuate financial inclusion,” Marcel said, adding that COFINA was open to "supporting and financing the government in its various endeavors.”

In Togo, the Ivorian group’s main goal is to "participate, sustainably, in the economic development of the country by contributing to the emergence and consolidation of SMEs." In this framework, COFINA Togo will support SMEs and all entrepreneurs left out of traditional financial systems.

In March 2021, the group partnered with CUBE, a Togolese incubator, to provide up to CFA25 million to growing businesses that have been operating in the country for a minimum of three (3) years.

In September 2021, the financial institution also signed a financing agreement with the Risk-sharing-based Mechanism for Incentive Agricultural Financing (MIFA), in favor of agricultural SMEs.

Esaïe Edoh

GuarantCo has granted Orabank-Togo a CFA14.55 billion guarantee to finance road and telecom development projects in Togo. This is the second time that the subsidiary of the Private Infrastructure Development Group (PDG) is providing a guarantee to support infrastructure development in Togo. The first time was in 2019 when the fund helped Togo’s commercial banks support the Kekeli Efficient Power project.

Commenting on the new facility, GuarantCo said in a statement obtained by Togo First on Jan 27, 2022: "The guarantee provides Orabank with capital relief, allowing it to expand its infrastructure portfolio while remaining within the limits of a single debtor. The projects supported include telecommunications and road projects in Togo."

Moreover, "This portfolio guarantee improves Orabank's prudential ratios by 742 basis points and 837 basis points for Tier 1 capital and solvency ratios respectively," the fund said. This, it added, should allow Orabank to better support the government’s 2025 roadmap. 

Guy Martial Awona, CEO of Orabank Togo, welcomed "GuarantCo's support for [Orabank's] portfolio guarantee, which increases its ability to finance business growth in the telecommunications, energy and infrastructure sectors. Once again, the bank is proud to contribute to the government's efforts in implementing the National Development Plan (NDP) launched in 2018."

GuarantCo is backed by several western governments as well as the World Bank Group.

Ayi Renaud Dossavi

For its third issue on the WAEMU market this year, Togo will seek CFA35 billion. The first two were successful. 

The issue - of fungible Treasury bonds - is scheduled to close on Feb 4, according to WAEMU-securities. It is set to mature over 120 months (10 years), has a nominal value of CFA10,000 and an interest rate of 5.9%. 

So far into the year, Togo has raised CFA64 billion on the regional money market, out of the CFA533 billion it aims at for the whole of 2022.

Esaïe Edoh

Togo and Iran are looking to reinforce their cooperation in the health, agriculture, and energy sectors. The matter was discussed in a recent meeting between some Iranian authorities and a delegation led by the Togolese Minister of foreign affairs, Robert Dussey, who ended a working visit in the middle eastern country last Wednesday.

Concretely, the two countries agreed to hold medical training programs and proceed to a mutual exchange of professionals in the health sector. Iran also mentioned the possibility of setting up a pharmaceutical plant in Togo, at the Industrial Platform of Adétikopé (PIA) to be precise.

Relative to energy, Iran said it is committed to helping Togo successfully implement its national electrification strategy and back its efforts to achieve universal access to electricity by 2030.

On the agricultural front, the Togolese and Iranian delegations reviewed the Togo irrigation support project.  The latter should be further discussed by both parties in an upcoming meeting.

During the recent roundtable, Minister Dussey’s delegation presented Iranian economic operators with business opportunities available in Togo. Subsequently, both nations decided to promote collaboration between their respective private sectors, via business meetings and exchange trips.

According to sources close to the matter, these various projects should be discussed in-depth during the upcoming trip of Iran’s Minister of foreign affairs, Hossein Amir-Abdollahian, to Lomé.

Back in 2010, Togo and Iran signed two visa exemption agreements for diplomatic passport holders. Lomé also granted a prospecting license to Iranian mining firms. These moves were also aimed at bolstering cooperation between the two countries.

Esaïe Edoh  

Forecast at 58 billion CFA francs at the beginning of 2021, and scaled up to 110 billion CFA francs in October of the same year, the Togolese army budget should reach 105 billion CFA francs in 2022, according to official forecasts. 

The forecasts are released in a context where terrorists’ presence keeps growing in the sub-region, nearing the coast. Last year, Togo lost seven peacekeepers during a mission in Minusma, Mali. The country also recently reported the first terrorist attack on its soil, near the border with Burkina Faso.

In detail, Lomé plans to allocate CFA43.4 billion for the strategic endowment of the army, CFA21.9 billion for the preparation and use of military forces, and CFA38.5 billion for logistics equipment and joint support. Veterans are also supposed to receive CFA140.2 million.

A higher budget

The budget that the army recently announced – compared to that announced in early 2021 – is closer to that suggested under the 2021-2025 military programming law (LPM). This plan, adopted in December 2020, had set army spending at 129 billion for the year that ended (up 10% compared to the 110 billion expected by the government), and over 700 billion throughout the period it covers.

"Preserving peace and security is more crucial than ever given the threats that are emerging here and there, especially in our sub-region," President Faure Gnassingbé had said in his end-of-year address (in 2020). "The recent military programming law gives the defense and security forces the appropriate tools to carry out their protection and defense mission, in cohesion with all the living forces of the nation," the Head of State added at the time and this was shortly after the adoption of the military programming law.

Still below initial projections…

For this year, the LPM’s projection for military expenses is put at 152 billion, 30% above the government’s expectation (CFA105 billion).

Concretely, Lomé plans to invest in new military equipment, fatten the army’s ranks by about 30%, from 5,000 soldiers in 2021 to 22,000 soldiers in 2025. Part of the projected expenditures will also go into ramping up numbers in the gendarmerie corps, from 3,000 to 8,000 in 2025.

Military spending not neglected despite Covid crisis

Though the Covid-19 pandemic has adversely affected the Togolese economy, especially in terms of budget allocation, funds allocated to the army in the past few years were quite significant, at least compared to the last decade.

Two years ago, at the pandemic’s pinnacle, Togo managed to keep its defense spending above 2% of GDP, according to Country Economy.

According to the Stockholm International Peace Research Institute (SIPRI), Togo ranks 31st in Africa in terms of military spending, ahead of neighbors such as Côte d'Ivoire, Mali, Senegal, Burkina Faso, and Niger, in a subregion plagued by the jihadist threat.

Ayi Renaud Dossavi