R 161136Z JAN 09
FM AMEMBASSY LOME
TO SECSTATE WASHDC 8970
DEPT OF TREASURY WASHDC
DEPT OF COMMERCE WASHDC
USDOC WASHDC
CIMS NTDB WASHDC

UNCLAS LOME 000017 
 
 
DEPT FOR EB/IFD/OIA (HATCHER), USTR, DEPT OF TREASURY, OPIC 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB KTDB OPIC USTR TO
SUBJECT: TOGO - 2009 INVESTMENT CLIMATE STATEMENT 
 
REF: 08 STATE 123907 
 
 
¶1. The following is Togo's 2009 Investment Climate Statement as 
requested in reftel: 
 
OPENNESS TO FOREIGN INVESTMENT 
 
¶2. Togo has traditionally provided a hospitable environment for 
foreign investment. However, political instability has diminished 
both opportunities and investor confidence.  The government 
distinguished itself through the 1980's as a western-oriented, 
entrepreneurial hub in the region. However, in the early 1990's, 
investor interest fell sharply due to overt political unrest in 
Togo.  As the country emerges from the negative economic impact of 
that period and its poor political and human rights record, foreign 
investment is even more welcome than it was previously. The 
government continues to seek high-profile fora in which to promote 
its investment opportunities, particularly in the free trade zone. 
 
¶3. Following years of political stalemate and economic stagnation, 
important progress was achieved in 2007 and the latter half of 2006 
toward a return to stability and dialogue. Free and fair legislative 
elections in October 2007 were followed by the formation of a new 
government in December 2007. Many challenges remain for improving 
the climate for private sector activity, particularly in such areas 
as administrative and judicial transparency, and banking. 
International donor programs are supporting these efforts; the 
European Union pledged financial support for Togo after the 
legislative elections. The World Bank and the African Development 
Bank both forgave Togo's arrears in 2008, and it was determined that 
Togo now qualifies for Heavily Indebted Poor Country (HIPC) debt 
relief. 
 
¶4. The current investment code was enacted in April 1990. The code 
and related regulations were designed to encourage foreign 
investment, and they are a marked improvement over the previous 
code.  Foreign investment could be an important element in achieving 
the government's goals of diversification from traditional exports 
(agricultural cash crops, phosphates), and in suspended 
privatization programs (phosphates, telecommunications, tourism, and 
cotton). 
 
¶5. It is anticipated that the investment code will be further 
improved in the short- to medium-term. Revisions have already been 
made, particularly with regard to incentives.  As a member of the 
West African Economic and Monetary Union (WAEMU), Togo is 
participating in zone-wide plans to harmonize and rationalize 
regulations governing economic activity within OHADA (Organization 
for the Harmonization of Commercial Law in Africa), which includes 
the 14 CFA zone countries and the Comoros and Guinea.  A common 
charter on investment is one of the projected elements of that 
effort.  The resulting national investment code will be greatly 
simplified and is expected to be limited to general dispositions 
related to non-discrimination, guarantees, and arbitration. 
 
¶6. The 1990 code permits investment in the following sectors: (a) 
agriculture, animal husbandry, fishing, forestry, and activities 
related to the transformation of vegetable and animal products; (b) 
manufacturing; (c) exploration, extraction, and conversion of 
minerals; (d) low-cost housing; (e) hotels and tourist 
infrastructure; (f) agricultural storage; (g) applied research 
laboratories; and (h) socio-cultural activities.  Investment under 
the code is limited to new investments of at least FCFA 25 million 
(about $50,000) for foreign companies and FCFA five million (about 
$10,000) for Togolese companies.  The Togolese corporation charter 
covers investments of less than FCFA five million.  The investment 
code covers the expansion of existing enterprises if the cost of the 
expansion is at least half the value of the existing enterprise. 
Investors must provide at least 25 percent of the value of a new 
investment.  At least 60 percent of the payroll must go to Togolese 
citizens. Applications for approval under the law must be submitted 
to the planning ministry, which, in consultation with the national 
investment commission, approves or rejects the applications within 
30 days. The approval can take as little as 14 days to obtain.  The 
government decree granting approval spells out the conditions of the 
investment. 
 
CONVERSION AND TRANSFER POLICIES 
 
¶7. Togo uses the CFA franc (FCFA), which is the common currency of 
most of the Francophone countries of West Africa.  The FCFA is fixed 
at a rate of FCFA 656 to 1 Euro.  The exchange system is free of 
restrictions for payments and transfers for international 
transactions.  The investment code provides for the free transfer of 
revenues derived from investments, including the liquidation of 
investments, by non-residents.  There are no restrictions on the 
transfer of funds to other West African franc zone countries or to 
France.  The transfer of more than FCFA 500,000 (about $1000) 
outside the franc zone requires Finance Ministry approval. 
Approvals are routinely granted for foreign companies and 
individuals; the law stipulates that the process should be completed 
in two days, but delays are not uncommon. Togolese citizens and 
companies are not generally allowed to hold bank accounts outside of 
the franc zone.  With its WAEMU partners, Togo is examining removing 
the remaining restrictions on capital transfers.  Financial 
transactions within the franc zone can be more complicated than 
might be expected, due to country-specific administrative obstacles 
to inter-country banking activities. 
 
EXPROPRIATION AND COMPENSATION 
 
¶8. The only expropriation of property in Togo was the 1974 
nationalization of the French-owned phosphate mine.  The government 
paid sufficient compensation. 
 
DISPUTE SETTLEMENT 
 
¶9. The investment code provides for the resolution of investment 
disputes involving foreigners through one of several means: (a) the 
provisions of bilateral agreements between the government of Togo 
and the investor's government; (b) arbitration procedures agreed to 
between the interested parties; or (c) through the offices of the 
Convention on the Settlement of Investment Disputes Between States 
and Nationals of Other States, of which Togo became a member in 
¶1967.  Togo has adopted and implemented regional business 
legislation through the Organization for the Harmonization in Africa 
of Commercial Law (OHADA); while its enforcement is limited by the 
weak legal and judicial systems, the government is currently 
implementing a justice modernization project to improve 
transparency.  Lack of transparency and predictability of the 
judiciary is a serious obstacle to enforcing property and judgment 
rights, and similar difficulties apply to administrative procedures. 
 
¶10. There are no current bilateral trade policy disputes between 
Togo and the United States. The government accepts international 
arbitration of investment disputes. 
 
PERFORMANCE REQUIREMENTS/INCENTIVES 
 
¶11. The various tax advantages that were previously bestowed under 
both special conventions and the 1990 investment code were 
eliminated. A 1995 finance law terminated all incentives that had 
been maintained beyond their legal duration.  Remaining regulations 
granting incentives will not be renewed, and no new exceptions will 
be granted.  To the extent that some incentives are retained, they 
are expected to occur within the tax code and address depreciation, 
treatment of losses, taxation of capital goods, and relief on 
intermediate inputs for exports goods. 
 
¶12. Togo has adopted the WAEMU policy framework, including the 
common external tariff.  This has led to a low average external 
tariff and to the absence of significant non-tariff barriers and 
major export restrictions. 
 
¶13. Price control and profit margin regulations have been largely 
eliminated in the only sectors still subject to administrative price 
controls: electricity, water, and telecommunications.  Private 
competition in telecommunications was introduced in 1999, allowing 
better market-oriented pricing in that area. 
 
¶14. While the steps for receiving residence permits are in theory 
well-defined, in practice foreigners seeking to legalize their 
status for long-term work and residence purposes have encountered 
significant administrative obstacles and delays.  Issuance of such 
permits is the responsibility of the national police. 
 
RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT 
 
¶15. The Chamber of Commerce recently implemented a new system for 
business registration. The entire process has been streamlined into 
one office. While delays still occur due to the need for several 
ministries to approve the application, the process has been 
simplified and is more efficient than in the past. 
 
¶16. The government of Togo is under pressure from the international 
banking community to privatize parastatal enterprises, but thus far 
little progress has been made. 
 
PROTECTION OF PROPERTY RIGHTS 
 
¶17. Togo is a member of the World Intellectual Property Organization 
and the Cameroon-based African Intellectual Property Organization. 
For specific information on IPR matters, please contact BP 831, 
Lome, Togo; Tel (228) 222-10-08; Fax: (228) 222-44-70.  Protection 
of physical property is frequently contentious in Togo, as 
inheritance laws are poorly defined and property transmission 
outcomes are frequently challenged.  Only Togolese citizens or those 
granted citizenship by court decision, French citizens, or foreign 
governments are allowed to possess real property in Togo.  Real and 
chattel property disputes are further complicated by judicial 
non-transparency, which will often favor national over foreign 
entities. 
 
TRANSPARENCY OF THE REGULATORY SYSTEM 
 
¶18. Lack of judicial and regulatory transparency is a significant 
obstacle to business development.  Togo needs to implement a 
large-scale overhaul of the legal and regulatory framework to 
address these shortcomings. Measures include regional initiatives 
regarding business and investment law, such as the common WAEMU 
investment charter mentioned above.  The common business law treaty 
(OHADA), which entered into force on 1 January 1998, should 
theoretically reduce judicial uncertainty across the region; 
however, in actual practice it will only function well after an 
overhaul of theQational judicial system.  In December 2006, the 
government passed a revised labor code that provides for improved 
treatment of workers.  The new code also forbids the worst forms of 
child labor and prohibits discrimination against women, disabled 
persons, and those with HIV/AIDS. A new Child Code was passed in 
July 2007 which further protects the rights of children. 
 
¶19. Togo made a great deal of progress in 1997 with plans to 
rationalize the tax system and its administration, bringing about 
both simplification and revenue enhancement.  The value-added tax 
has been unified at 18 percent (as opposed to the previous two-rate 
structure of 7 percent and 18 percent).  The World Bank continues to 
encourage revisions to the tax code. 
 
¶20. New Customs administrative processes entered in effect on 
January 1, 2008 and will significantly improve import and export 
procedures and will establish more transparency. The new process 
includes an online one-stop clearing system. 
 
EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT 
 
¶21. Togo's political upheavals have severely weakened the banking 
system.  While there was some improvement beginning in 1995-1996, 
particularly among the smaller banks, Togo still has not regained 
its previous reputation or position as a regional banking center. 
The larger banks, which are either wholly or partially state-owned, 
hold shaky loan portfolios characterized by very high exposure 
(about one-third of total bank credit) to the government and the 
phosphates and cotton parastatals. While the government, in order to 
comply with an IMF Staff-Monitored Program, paid back arrears to the 
cotton sector in 2007, other domestic payment arrears remain a 
constraint.  In these circumstances, commercial banks have been 
hampered in financing renewed economic expansion.  A 
bank-restructuring program designed in coordination with the World 
Bank is defining recapitalization needs and investigating possible 
sales of government-held shares to private investors. Togo's 
monetary policy is managed by the Central Bank of West African 
States (BCEAO), which also keeps the accounts of the member states 
treasuries. 
 
POLITICAL VIOLENCE 
 
¶22. The most significant issue affecting Togo's commercial climate 
during the past decade and a half has been the political 
instability, division, and unrest that have characterized the 
country's uneven democratic transition. The instability affected 
economic and political activity within Togo as well as the nation's 
relations with the international community. Until the legislative 
elections of October 2007, national elections throughout this period 
were marked by turmoil and violence. Although anti-foreigner 
sentiment intensified during periods of civil unrest, Americans have 
never been specific targets of violence. 
 
¶23. Togo is a republic headed by President Faure Gnassingbe, son of 
the late General Gnassingbe Eyadema. Eyadema was president from 
1967, when he assumed power in a military coup, until his death in 
early 2005. Eyadema and his political party, with the strong backing 
of the armed forces, dominated politics and maintained control over 
all levels of the country's highly centralized government. Eyadema's 
death in 2005 triggered a new wave of unrest that resulted in many 
deaths and the further division of Togolese society. Controversial 
presidential elections in April 2005 brought Faure to power. Since 
his accession, Faure has based his leadership on ending Togo's long 
political crisis and isolation from the donor community by engaging 
the opposition in a wide-reaching political reform process. 
 
¶24. The "22 Commitments" agreed by the Government of Togo and the 
European Union in mid-2004 have helped to provide a framework for 
efforts to end Togo's long political impasse. One of the commitments 
called for a national dialogue involving all major political actors. 
This dialogue began in April 2006 and produced a road map for 
further reforms, including the appointment of a national unity 
government whose primary task would be the organization of free and 
fair legislative elections. The legislative elections were held on 
October 14, 2007. Although there were some irregularities, they were 
declared free and fair by the EU, the Africa Union, ECOWAS, and 
other international and domestic observers. As a result of the 
successful conduct of these elections, the international community 
has re-engaged with the country. 
 
CORRUPTION 
 
¶25. Although Togo has laws on the books that make corruption a 
crime, it has spread as a business practice in recent years. 
Government procurement contracts and dispute settlements are more 
likely to go forward after palms are greased.  Giving a bribe, 
whether to private or government officials, is considered a crime 
but is often expected.  The police, gendarmes, and courts are 
charged with combating corruption in Togo. Some Togolese officials 
have been charged and convicted of corruption-related charges, but 
these cases are relatively rare and appear to involve mostly those 
who have in some way lost official favor. 
 
BILATERAL INVESTMENT AGREEMENTS 
 
¶26. The United States and Togo signed a warranty of private 
investments and amity and economic relations treaty in 1962, the 
Togo Amity and Economic Relations Agreement. The Togolese government 
has, in the past, expressed an interest in a bilateral investment 
treaty with the United States government, but negotiations started 
in 1991 were never concluded. Togo has signed many economic, 
commercial, cooperation, and cultural agreements with its foreign 
aid donor countries, including France, Germany, Canada, the 
Netherlands, Belgium, Japan, and more recently with China, India, 
Iran, and Saudi Arabia. 
 
OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS 
 
¶27. OPIC once played an active role in promoting foreign investment 
in Togo and has recently started to again play a role with its 
provision of political risk insurance for a natural gas project.  It 
co-sponsored (with USAID) the visit of 15 potential investors to 
Togo in 1990, and it helped establish the Togolese investment 
promotion center and free trade zone.  The French government agency 
COFACE provides investment insurance in Togo under programs similar 
to those offered by OPIC. Investment insurance is also available 
through the Multilateral Investment Guarantee Agency (MIGA). 
Insurance mechanisms involving a government guarantee of debt may 
carry implications for Togo's commitments to international financial 
institutions. 
 
LABOR 
 
¶28. Togo has a small pool of qualified university graduates and a 
sizeable population of unskilled workers, although there are 
shortages of workers with intermediate technical skills and 
practical experience.  Generally, unemployment and underemployment 
are high, and young Togolese trying to enter the formal sector job 
market have difficulty finding work.  The adult literacy rate is 
about 57 percent. Most Togolese speak French (the official 
language). Few people speak English, though many have a rudimentary 
knowledge. 
 
¶29. The minimum wage is FCFA 28,000 (approx. $62) a month for 
unskilled industrial workers.  There are separate wage scales 
negotiated by employers, workers, and the government for industry, 
construction, public works, commerce, and banking.  Non-wage costs 
(e.g., social security and medical costs) run about 40 percent of 
wages.  Togo was unique among the CFA countries in not introducing a 
general wage increase after the CFA devaluation in 1994.  Private 
sector employers generally follow government wage movements. 
 
¶30. After a period of vigorous labor activity in the early 1990's, 
mostly in support of the stillborn democratic political transition 
and capped off by a nine-month general strike in 1992-93, labor 
union activity has been muted. Strikes have not been common in Togo. 
 Several of the independent confederations banded together to form a 
syndicate to negotiate more effectively with the government and 
business management in the wake of the CFA devaluation.  They have 
not been notably successful.  However, for the first time in over 
fifteen years, unions negotiated a settlement with the government at 
the end of November 2006.  A threatened 24-hour strike was called 
off after the government agreed to meet union demands.  The 
government has since fulfilled all commitments made in the 
agreement, including a five percent salary increase to government 
workers and payment of salary arrears. In January, health workers 
went on strike to protest work conditions; the minister of health 
promised to meet their conditions. However, nothing was done, and 
the health workers went on strike again in September.   In July, 9 
phosphate workers were fired after going on strike for five and a 
half hours. 
 
FOREIGN TRADES ZONES/FREE TRADE ZONES 
 
¶31. Togo has had a free port for many years. It serves as a 
transshipment facility for goods passing through the port of Lome to 
neighboring countries. 
 
¶32. In 1989, the Togolese government approved an export processing 
zone (EPZ) law.  Advantages of the EPZ include a less restrictive 
labor code and the authorization to hold foreign 
currency-denominated accounts.  The law requires EPZ firms to employ 
Togolese on a priority basis, and after five years foreign workers 
cannot account for more than 20 percent of the total workforce or of 
any professional category.  EPZ firms may, with government 
permission, sell not more than 20 percent of their production in 
Togo.  While there are two physical EPZ sites, investors may locate 
outside of these areas and still enjoy EPZ status.  Approximately 58 
firms are operating in the EPZ as of January 2009, with an 
additional 30 preparing to open..  However, severe electricity 
shortages in Togo continually cause great difficulty for 
manufacture-oriented companies in the zone. The destruction of 
bridges by flooding during the rainy season in 2008 made some firms 
shut down temporarily due to an inability to move their goods. 
 
FOREIGN DIRECT INVESTMENT STATISTICS 
 
¶33. Major foreign investors: 
 
United States 
Contour Global: Constructing a 100-megawatt power plant in Lome. 
Signed a $146 million non-recourse financing agreement with OPIC. 
There are also a few individual U.S. citizens operating small 
businesses in sectors such as import-export and retailing. 
 
France 
AGS Togo- Frasers International: French-owned international moving 
and storage company. 
Air France: Subsidiary of French airline. 
Air Liquide: majority French-owned medical gas company. 
Allo Hygiene: majority French-owned cleaning company. 
Assurances Generales du Togo (AGF): French-owned insurance company. 
Cica Togo: Distributor of Toyota and Mazda vehicles. Also involved 
in household equipment and general trading.  Working capital CFA 1.2 
billion, investment CFA 145 million.  Owned 70 percent by the French 
Group Pinaut. 
CFAO Togo: French-owned commercial company. 
Groupement d'Entreprises de Transports Maritimes et Aeriens (GETMA): 
French-owned maritime and air transportation agency. 
Mercure Hotel Sarakawa and Ibis Hotel Lome: The French Group Accor 
took over and renovated Hotel Sarakawa, now known as the Hotel 
Mercure-Sarakawa and Hotel Le Benin, now known as Ibis Hotel Lome 
Centre. 
Nouvelle Industrie des Oleagineux du Togo (NIOTO): Manufacturer of 
edible oils (primarily cottonseed oil). The company bought two 
former government-owned oil plants under the privatization program. 
NIOTO's initial capital of CFA 1 billion was owned principally by 
the French company CFDT (Compagnie Francaise pour le Developpement 
des Fibres Textiles). 
Societe Togolaise de Produits Marins S.A. (STPM S.A.): Majority 
French-owned seafood processor/exporter that sells fish, shrimp, and 
lobster.  Investment of CFA 430 million. 
Satom-Togo: Public works/construction company. Capital CFA 5 
million. Subsidiary of French company Satom. 
Societe Togolaise de Boissons (STB): Soft drink distributor. 
Previously a parastatal venture with German participation, the 
French group Castel bought controlling shares in both STB and the 
Brasseries du Benin (BB), the beer brewery and soft drink processor, 
under the privatization program. 
Societe Togolaise des Gaz Industriels (Togogaz): Fabrication and 
sale of industrial and medical gasses and equipment.  Capital CFA 
1.1 billion.  Owned 60 percent by the French company Air Liquide, 
but the government's shares are sold on the Abidjan stock exchange. 
Togocrus Sarl: French-owned processor/exporter of seafood. 
Investment of CFA 545 million. 
UAC Togo: Import-export company.  Capital CFA 853.2 million, owned 
78 percent by French company UAC. 
Udecto: Construction and public works.  Capital CFA 160 million. 
Owned 73 percent by French company Campenon Benard. 
Total Togo: Petroleum products distribution. Capital CFA 511 
million.  Has 45 service stations in Togo and about 47 percent of 
the market.  Total took over Mobil Oil's retail distribution in Togo 
in 2006 (29 service stations, about a 30 percent market share, 
capital of CFA 376 million). 
 
Germany 
BENA Development/Marox: Agriculture and livestock raising, 
delicatessen, restaurant.  German family-owned business.  Capital 
CFA 200 million. 
Hoechst Togo: Chemical and agricultural product sales. Company is 75 
percent owned by Hoechst AG, Germany. Capital CFA 5 million. 
Denmark 
Fanmilk: The Danish dairy company Emedan has a long-term lease on 
the former government-owned dairy products company as part of the 
privatization program. 
Industrie Togolaise des Plastiques (ITP): Joint investment by the 
Danish company FMO, the Danish development agency IFU, and the Dutch 
company Wavin. Total capital of new company CFA 735 million. 
Atlantic Produce: Exporter of tropical houseplants. Investment of 
CFA 260 million. 
 
Norway/Germany 
Societe des Ciments du Togo (Cimtogo): Cement production company. 
Previously 50 percent owned by the Scandinavian company Scancem, 
Cimtogo bought out the government's shares in 1996.  Scancem was 
recently purchased by a German multinational, but continues to 
operate locally under Norwegian management. 
 
Ethiopia 
ITT Co. Sarl: Majority Ethiopian-owned manufacturer of automotive 
seat covers and shoes.  Investment of CFA 103 million. 
South Korea 
Amina Togo S.A.: Producer of synthetic hair. Investment of CFA 342 
million. 
Sofina Sarl: Manufacturer of fishing nets and ropes. Investment of 
CFA 13 million. 
Nina: Producer of synthetic hair. Investment of CFA 115 million. 
 
India 
Boncomm International Togo: Indian-owned clothing manufacturer. 
Exports to Europe and USA. 
Ramco: The largest and most profitable chain of supermarkets and 
electronic stores. 
Wacem (West Africa cement company): Originally developed as a joint 
Togolese-Ivoirian-Ghanaian cement production venture, the factory 
floundered due to management dissention and losses on 
Cedi-denominated sales in Ghana.  An Indian firm has resurrected the 
company, which produces clinker (limestone) for Cimtogo and is 
beginning to manufacture and market cement itself. 
 
Belgium 
Umco Sarl: Belgian-owned manufacturer of leather watchbands and 
other leather goods.  Investment of CFA 32 million. 
 
United Kingdom 
Garage Hellel: BMW dealer.  Also local representative for Jeep 
vehicles. 
Shell Togo: Owned by British subsidiary of Royal Dutch Shell. 
 
Armenia 
Societe Generale des Grands Moulins du Togo (SGMT): The only flour 
mill in Togo.  Capital CFA 1.1 billion. The company became Armenian 
in 1997. 
 
 
Hawkins