Lomé is hosting the 33rd extraordinary session of the Interparliamentary Committee of the West African Economic and Monetary Union (CIP-UEMOA). Started on May 8, the meeting gathers deputies from all eight Member States and ends on May 12. 

The deputies will discuss the Union’s Program Budget reform and its Fiscal Transition strategy. According to Adam Efangal, president of CIP-UEMOA, the reform should enable member countries to better manage their public finances, while the strategy aims to reinforce the Union’s budgetary space. 

The ongoing meeting is part of the Committee’s annual activities. Its goal is to enable the WAEMU’s deputies to know more about new public finance management techniques, to foster social harmony and economic development across the Union.

Togo’s parliament approved, on May 8, the ratification (by Togo, ed. note) of the African Medicines Agency (AMA) Treaty. This should allow the country to better fight the use and distribution of fake drugs, and bolster its pharmaceutical industry. 

Fighting counterfeit drugs is one of Lomé’s main priorities. In 2020, after a summit on the issue, Togolese authorities, several African leaders, and the Brazzaville Foundation launched the “Lomé Initiative”, a project aimed at criminalizing the trafficking of fake drugs. 

The AMA Treaty, which was ratified in Addis Ababa in February 2019, has the objective of enhancing and safeguarding the health of Africans by guaranteeing prompt and dependable availability of secure and quality-assured medications. The Agency will collaborate with African Union (AU) member countries and Regional Economic Communities (RECs) to achieve this goal. The Treaty officially became effective in November 2021.

According to the World Health Organization (WHO), fake drugs kill over 100,000 people every year in Africa, and this highlights the importance of an institution such as the AMA. 

Last week, the Bank of Africa (BOA) and BKG Distribution, a group that sells agricultural equipment, formed a partnership in Togo to provide support to local farmers.

Under the deal, BOA Togo will provide individual farmers or groups of farmers a lease to finance their activities. Meanwhile, the BKG Distribution group, newly established in Lomé, will provide them with agricultural equipment (such as combine harvesters, tractors, etc.).

Borrowers, according to the agreement, will be able to repay the lease over three years, with "competitive interest rates".

The new partnership responds to a demand of farmers for funds, said Bassirou Bonkoungou, Director, BKG Distribution Group. “Through the lease solution, they (farmers, ed note) will be able to secure funds easily and rapidly,” added Youssef Ibrahimi, General Manager of BOA-Togo. Simply put, the farmers will be able to get loans without an upfront payment.

The partnership between BOA and BKG Distribution aligns with the government’s commitment to support agricultural transformation and make the sector a development lever. 

Among the steps that Lomé took to achieve this objective is the recent launch of a Centre for Agricultural Mechanization (CRMA) in each of Togo’s five regions. 

Esaïe Edoh

A World Bank delegation, present in Lomé, Togo, since May 2, 2023, finished, on May 8, evaluating the implementation of the Food System Resilience Program (FSRP) in the country. 

The delegation reviewed, with Togolese actors, suggestions made during the first support mission and assessed work done under the 2023 annual budget as well as work plans for the Program. The various parties also assessed financial management and procurement towards enhancing the FSRP’s performance. 

The evaluation allowed the State to recommend new steps to improve the Program’s implementation.

The FSRP, a program covering West Africa, is backed by the World Bank. The Bretton Woods institution has invested $90 million (over CFA50 billion) in the program. 

Esaïe Edoh 

This could strongly impact regional financial markets and mirrors a global trend of monetary tightening by Central Banks.

The Central Bank of West African States (BCEAO) might increase its key interest rates at the upcoming monetary policy meeting, scheduled for June 2023, according to information from Agence Ecofin. This would be the fifth consecutive time within a year that the Bank will raise its rates, mirroring a global trend of monetary tightening among major central banks such as the European Central Bank (ECB) and the US Federal Reserve (Fed).

Between June 2022 and now, the BCEAO has raised its key interest rates four times. Through this, the apex lender aimed to control inflation, safeguard foreign exchange reserves and stabilize economic growth. The latest hike was in March when the Bank increased its refinancing rate to 3%.

Despite inflation decreasing for four consecutive months, it steadied in March 2023 reaching 5.7%, far above the BCEAO's target of 3%. Analysts believe raising the key interest rates more would send a strong signal to the market, indicating the Central Bank's commitment to controlling inflation and maintaining financial stability. This could bolster investor confidence in the regional economy and potentially impact the equity market, favoring bond investments and other less risky financial assets.

However, this monetary adjustment also suggests the BCEAO is not convinced that the recent downward inflation trend will continue, and it fears a long-term increase. More tightening could be seen as "overconfidence" in the WAEMU’s economy. According to the IMF, the latter is expected to grow at 6% this year compared to 5.5% in 2022. Last February, the BCEAO predicted that the WAEMU’s real GDP would stand at 5.1% and 5.3%, in Q1 and Q2 2023, respectively. In Q4 2022, the figure stood at 5.4%.

It's worth noting that previous increments in key interest rates led to higher bond yields and a liquidity crisis in the sovereign bond market. However, the situation stabilized in April, thanks to a measure allowing banks to buy their sovereign shareholders' securities in large quantities. The average coverage level for issues rose to 157.10% last week (first week of May) from less than 100% throughout March. It was already at 132% in the last week of April, reflecting a growing appetite among investors for public securities.

A new increase in key interest rates might be welcomed by investors looking for attractive returns in the bond market. But for the region's States, already cut off from international financial markets, the challenges posed by a rise in the cost of regional financing would only grow. This could impact the financing of budget deficits. The net financing needs of governments are estimated at over 4,300 billion FCFA (about $7.2 billion) this year.

On the other hand, states like Benin, which have managed to keep inflation within the BCEAO's target range, find themselves bearing the brunt of the increased key interest rates and the resultant rise in the costs of regional financing.

Fiacre E. Kakpo

In Togo, the Autonomous Road Maintenance Financing Company (SAFER) raised CFA30.46 billion for the 2022 fiscal year from its maintenance activities. This is about 2 billion less than its target for the period–CFA32.84 billion.

The government disclosed the figure on May 8, 2023, during its latest council of ministers. The Minister of Public Works, Zourehatou Kassah-Traoré, on the occasion, stressed the importance of modernizing the country's road transport infrastructure.

Many of the social measures that the government introduced to reduce the cost of living had an impact on the SAFER’s efforts to raise funds. Among these measures was the suspension of the Motor Vehicle Tax (TVM) which caused SAFER to lose nearly CFA2 billion. However, when the tax was reinstated in 2019, the Company was able to raise CFA1.32 billion the next year.

Ayi Renaud Dossavi

Nearly one million Togolese citizens live outside their home country. The figure was disclosed by Robert Dussey, the Minister of Foreign Affairs, on May 8, during a Council of Ministers.

The diaspora counts exactly 950,436 people, according to a censure carried out in 2022. Among them are 52.82% men and 44.18% women.

Leveraging the data, the government will better guide its policies and decisions to make the diaspora a key contributor to Togo’s development.

In 2019, Togo set up a High Commission for Togolese Abroad (HTCE) in this same framework. The Commission serves as a bridge between the government and the diaspora. 

The Togolese diaspora contributed $441 million (238.3 billion FCFA) to the country’s diaspora, down from $458 million (247 billion FCFA) in 2019, according to Robert Dussey.

Esaïe Edoh