Report No. 458a-TO Y Current Economic Situation and Prospects of Togno December 30, 1974 Western Africa Regional Office Not for Public Use Document of the International Bank for Reconstruction and Development international Development Association C: -- - This report was prepared for official use only by the Bank Group. It may not bc pub!:shed, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
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Document of the International Bank for Reconstruction and Developmentinternational Development Association
C: -- -
This report was prepared for official use only by the Bank Group. It may notbc pub!:shed, quoted or cited without Bank Group authorization. The Bank Group doesnot accept responsibility for the accuracy or completeness of the report.
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CURRENCY EQUIVALENTS
1. Currency unit: CFAF Franc (CFAF')
2. Fixed parity: 50 CFAF = 1 FF
3. The CFAF floats against all other currencies.Between February 12, 1973 and Januarv 197h,.the US$ exchange rate has fluctuated betweenOFAF 205 - 255 = 1 US$.
4. The following rates have been used in this report:
1 US$ = CFAF
1973 2301972 2561971 2781970 2781969 2581968 and earlier 247
WEIGHTS AND MEASURE
I metric ton (t) - 2,205 lbs.
1 kilogram (kg) = 2.2 lbs.
1 kilometer (km) - 0.62 mile
1 meter (m) 3.28 feet
inis report is based on the findings of an economic missionwhich visited Togo in November/December 1973. The mission was composed ofMessrs. Rolf Glaeser (mission chief),. Chuong Phung (general economist)and Serge Michailof (agricultural economist; consultant). Mr. FrancisLethem (Chief, Education projects division) participated in the missionfield work (part-time).
The report takes into account comments made by the Governmentduring discussions in November/December 1974.
SUMMARY AND CONCLUSIONS .............................. i - vii
I. INTRODUCTION .................................... iII. RECENT ECONOMIC DEVELOPMENT ..................... i
III. PUBLIC FINANCE POSITION ......................... iiIV. SECTOR DEVELOP1MENTS ............................. iv
V. PROSPE,CTS ....................................... vi
I. INTRODUCTION ......................................... 1
II. RECENT ECONOMIC DEVLLOPMENT ..... 3..................... 3
2.1 Overall Development ..... ................... 32.2 Investment and Savings ..... ................. 52.3 Balance of Pavments ................... .... 5...... 2.4 Terms of Trade ...... ..................... 82.5 Monetqrv Develonments ..... ...................... 82.! Price Movements ...... ........................... 11
III. PUBLIC FINANCE POSITION ..................... 13
3.1 Current Revenues . .......................... 133.2 Current -xnenditure.................. 133.3 Budgetary Savings and Liquiditv Position .... .... 163.4 PtuF-lir Tnvestment and Tts Financin. .... ......... 183.5 External Public Debt ............................ 18
IV. SECTOR DEVELOPMENTS ....... ........................... 20
Crude Birth Rate (per 1,000) 55 Population per physician 30,000Crude Death Rate (per 1,000) 29 Population per hospital bed 650Infant Mortality (per 1,000 live births) 121
INCOME DISTRIBUTION DISTRIBUTION OF LAND OWNERSHIP% of national income, highest quintile *- % owned by top 10% of owners
lowest quintile .. % owned by smallest 10% of owners
ACCESS TO PIPED WATER ACCESS TO ELECTRICITY% of population - urban *- % of population - urban
- rural .. - rural
NUTRITION EDUCA.TION t]972Calorie intake as % of requirements 90 Adult literacy rate 10%Per capita protein intake Primary school enrollment 56%
1/
GNP PER C.APTTA in 1971: US $ 150
GR-S -^TO'J- PRODUJML IN i97-!1f AN`NUAL RATE Or- GR^OW`'H IL, cor.t6.;pr-c
US $ Mln. % 1966-7o .1971 197
GNP at Market Prices 319.5 100.0 6.7 0.4 -0.7Gross f mRtir' Tnr patmentt 57 . 17.8Gross National Saving 39.8 12.5Current Account Balance -17.2 5.LExports of Goods, NFS 73.4 2'.0Imports of Goods, NFS 98.0 30.7
OUTPUT, LABOR FORCE ANDPRODbUC-,'vTITY IN l-nIC
Value Added Labor Force V. A. Per WorkerUS $ Mln. % Thds. % US $ 7%
Capital Grants (8.4) (l0.4) (13.3) DEBT SERVICE RATIO for 1972 /Other Capital (net) -5.L -0.7 2.3 %Other items n.e.i 0.2 ,Q n-8Increase in Reserves (+) 0.8 -0.8 -8.2 Public Debt, incl. guaranteed 5.0
Imports 2.9 4.0 4.3of which petroleum 0.5 0.5 0.5Exports- =
RATE 017 EXCHK1TE 1BkD/IDA '°'MI.N,G, April 30, 1974 (`illion UVS$k)
The CFAF floats against all other currencies. BetweenFebruarv 12. 1973 and Januarv 1974. the US$ exchanze IBRD IDArate has fluctuated between CFAF 205 - 255 to 1 US$.The following rates have been used (1 uS$ equals CFAF): Outstanding & Disbursed - 3.3
ADB - African Development BankBCEAO - Banque Centrale des Etats ae l'Afrique de l'OuestBTD - Banque Togolaise de D6veloppementCEB - Communaute Electrique du BeninCEET - Compagnie Energie Electrique du TogoCERFER - Centre Regional de Formation oour Entretien RoutierCFDT - Cie. Franc,aise pour le Developpement des Fibres TextilesCFT - Chemins de Fer du TogoCIMAO - Ste. des Ciments de l'Afrique de l'OuestGNCA - Cni.sse Nationale du Gredit AgricoleCNE - Cai8se Nationale dl'pargnerMPPIA. - Cen+.re Nat.innl nplor 1 Promotion dps Petites Pt
Moyennes EntreprisesCN!SSS - taisse =+ Natinql e rip qIc teSGi1CTM1 -- Cie. Togolaise des Mines du BeninFADP Fonds ciIAmorticzpmpnt. ride 12 Dette 1nhhlinqFGCET - Fonds de Garantie des Credits aux Entreprises TogolaisesFNI - Fonds~ Natlonal d ITnvestli sement
IFCC - Institut Francais pour le Cafe et le CacaoITT - Industrie Textile Togol.aiseOPAT - Office des Produits Agricoles du TogoO)TP Off.-ice Tog-l-is des nvshae
RPT - Rassemblement du Peuple TogolaisSAB A- Ste. de All,ettes 'u Be'niSCIA - Ste. Industrielle Chimique AfricaineSIJY - St . NTati4on 'Ie UTnves4i s - - 4
SONAPH - St6. Nationale de D6veloppement de la Palmeraie et desnu-±.IleC
SORAD - St6. Regionale d'Amenagement et de DeveloppementLSO±.TOrA - SI tu. TogolUai'Lse UU Fd.e VI M - uzr e U des U'A er .LAU
SOTO@MRIAUX - Ste. Togolaise de MateriauxQuOV l - 4.4 V-4. -- - - -1 U 1 J_- 'I T14 -1 _V__1 V1 C _: CV V_ 4:;|ikil AJ v - LI UU. I~d I±IC L id.L J..U_ PJULAJ. ±d3 IUIIUJV dU.L'II UVI .L *A, " ~VV w y%1U
de la Cacaoy'ere et de la Cafeiere TogolaiseS L.D - ue. Iogolaise e U DBUL1so
STOGA - Ste. Togolaise de Cr6dit AutomobileuTB - unlonl Togolaise de DwiuLue
SUMMARY AND CONCLUSIONS
I. INTRODUCTION
i. During the first decade after Togo's independence the economy ex-nanded ranidlv. This was nrimarilv a result of rining nhnonhate and cocoaexports and booming commerce, including unrecorded border trade. Still,thp nvprnll liypl nf A1puslnnmpnt iq lnw and l.NP npr ranita AnmnintoF tn onlu$150 in 1971. Fluctuations of world market prices for cocoa and coffee, thetwo lpeadic~ng ar-(',t1tral pexport commodities, caused conidc.rable shornt-te-rm
variations in the terms of trade and in economic growth.
ii. Longer-term growth potential in Togo exists in the form of abundantpiv t-4x,bhl a 1 nsr 4in corti 4 n regn4 on osvl n4 fep ta1 o m4nrer resources and a vari etyof commercial opportunities. On the other hand, there are major developmentcor.straints, mostly of a structural nature, 4hich are dfficult to overcome inthe short-term. These obstacles include the small size of the domestic market,ur.ever. popyla-Ion distribution,, the prevalence of er.d^mic4-- disas, the-eveof education and technical know-how, as well-as urban unemployment and ruralunderemploymen.t.
-t 4.9 A.-ard of the problems, t.e G-vernment huas recently steppedA up ef:-.LAJ.L . LWC IA. 'LAI j L I/UA.5M I J V L a .%.6LL.J L %L.'. . A./~
forts to increase absorptive capacity through technical assistance and projectpreparation. 1 Lfrastructure proJects havla e laid the groundU for directly pro=ductive investments. The Government has actively pursued a policy of regionalcoopLperatLion to open up -possibilities for diversification andU exploitation ofnatural resources on a multinational basis. A reform of the education systemLs bUeiLng studied withLl a vLew to better adapt'ing iLt to economi.Lc andu socialneeds. Recent efforts to attach more importance to agricultural productionand rural developm-ent, t-o promotue sruall- andA m,ediu..,sizeA indiger.ous enter=prises, and to reform the education system indicate the Government's growingconcern for urgenl socio-economic problems.
II. RECENT ECONOMIC DEVELOPMENT
i-v. During the First Development Plan (1966-70), GIJP reLW aUnnually by6% in constant prices, mainly due to booming exports and improved termsof trade as a result of high cocoa prLceS. FrUoreign reserveS, public savings,and deposits rose markedly, while consumer prices remained fairly stable.The balance of payments and public finance position developed fa-vorably.
v. However, during-1971-73 deciining.terms of trade, agriculturai cropshort-falls'due to ba'd'weather, and'decreasing border trade contributed to adeterioration' in the economic and financiai situation. The estimated real GDPgrowth was"of the ord`er bf 1-2% per year. Agricultural producer prices rose
- ii -
only slightly and salary rates remained unchanged during 1972 and 1973. Re-eional income disnarities nrobablv widened since the drought was especiallvsevere in the already disadvantaged northern regions. Higher investmentstmnnorarilv ruiihioned the effpcts of the worsening external trade nosition.According to very preliminary estimates, national savings dropped from morethan 10n nf G-DP during 1966-67 to less than 5% in 1972 and even lowpr in 1973.
v4. The bala,ny-ce nf npaments depteriorntpd hprneaup of stanntina pynnrts
and rising imports. Falling cocoa prices combined with rising import pricesct. vqorsening of the terms of trade wlhirlh nnlxy starteid t-o roecover by the
end of 1973. The effect of the decline of the terms of trade on total incomeis estImated at 6% of C-DP on average for 1971-73. Tentative estimates sug-gest that the resource gap widened from about 1% of GDP during 1966-70 toruhy V0S.1%)¢ in 10772 .Anu eve mo i 197? 13. Irl-e4ef41f -c -4-e41., iF4-* UU6tU ± y I U/. it I 2 { L a.ttU C VCU UlWl C LtZ* v { J, ,C i1 Ct W;L X X WaO - i ,aL 1 X - s--i
nanced by increased aid inflows and a drawdown of foreign reserves. Thesediropped by a'most 50% fror, DecemLber !970 to Tuly t973 or frcem a level of sixmonths' import requirements to less then three.
vit. Domestic credit expanded rapidly in recent years chiefly because ofti'. 'ov rj-e t' fi'l' _'LA2 c _L 'L s e ui4n aX- ~1 - A-14- t -; -1 14 A-- - F n 4 _ '-
L LI1 1JUVVLLUU~IIL ~ U~iiCLL ~peLiU.LLL~ ~IiU LUI UP4J~LLC_LL FUV:LULJ. UCvX.LMD. LIX .n g1Lr
import prices and drought-induced food shortages led to an increase in con-sumer prices off roughlLy 7,, per year recently as against an estimate 1-2%during 1966-70. The money supply rose only moderately since the expansionarye,f£ ect ofk domesttc credit was lidarge'ly comLpensated 'oy tlhe ULawUo-UI, of -e gIireserves.
viii. Preliminary data obtained in late 1974 suggest a marked improve-.nent of Togo's current economic anrd financial position. During the firstsix months of 1974 phosphate exports rose to about CFAF 12 billion, and theynow account for about two-thirds of [lerclhandise exports. Total recorded ex-ports roughly tripled during the first half of 1974 against thie correspond-ing 1973 period primarily as a result of substantially higher world markeLprices for the country's principal export commodities. The 1974 trade bal-ance, ttherefore, will show a surplus for tne first time since 1969. Foreignreserves increased in line with the more favorable external trade situationand in fall 1 974 they represented the equivalent of approximately seven monthsof import requirements. GDP growth in 1974 is tentatively estimated to ex-ceed 20% in current prices and might be in the neighborhood of 1U0 in realterms.
III. PUBLIC FINANCE POSITION
ix. During the First Plan, public finance improved markedly thanks toboth an austerity policy until 1968 and economic expansion. Current revenuesrose at twice the GDP expansion rate and exceeded current expenditure growth.Rising budgetary savings, together with modest capital budget outlays, ledto a marked improvement of the Government's liquidity position. Savingsfrom semi-public agencies, notably OPAT trading surpluses, grew as well.
x. Budgetary revenues rose from about 11% of GDP during 1966-70 toaround 15% in 1971/72 mainly because of new Government tax measures to in-crease and diversify fiscal revenues. The major impact ot the recent deteri-oration of public finance seems to have occurred with a time lag in 1973when revenues dropped by an estimated 18% during the first 10 months of theyear. At the same time OPAT's financial position worsened and resulted ina substantial drawdown of public reserves.
xi. With a relaxation of the austerity policy in 1968-69, current expen-diture increased rapidly from 9% of GDP in 1966-70 to 13% in recent years.Personnel expenditures were one of the most dynamic factors. The number ofGovernment employees rose at an annual average rate of about 18% per year dur-ing 1970-73 as against nearly 7% in 1966-70. In view of this upsurge the Gov-ernment may wish to review its personnel policy and to evaluate manpower needsin relation to Government functions and in light of the financial implications.According to a functional classification, social services (especially educa-tion and public health), general services, and debt service absorbed increas-ing proportions of public expenditure, while appropriations for agricultureremained at the low level of only 6% of total current expenditure. Giventhe dynamism of expenditure growth, the authorities may wish to review ex-penditure policies in light of development priorities, including the planningof recurrent cost to achieve a high degree of fiscal flexibility.
xii. Budgetary savings remained roughly at the 1966-70 level of 2.7% ofGDP, even though in 1973 it appears a marked decline occurred. Higher capitalbudget outlays caused increasing cash deficits and thereby reduced the Govern-ment's liquidity position. Government deposits dropped from CFAF 4.7 billionor 47% of revenues in 1970, to CFAF 1.4 billion in October 1973 or 10% of1973 revenues.
xiii. Public investment amounted to about 7.8% of GDP during 1966-70.External funds Drovided 69% of total cost (mainly Germanyv FED and Franrp).The bulk of public investment was in infrastructure (57%), while directlyproductive investments accounted for only 29% (rural develooment 18%. industry
and trade 11%). Partial data indicate thiat sizeable amounts were earmarkedin recent vears for infrastructure including administrativesnoecal aervirp
investments, particularly in Lome. A growing proportion of the cost of theseDroiects was finanred with domestic funds. In view of devplopment nriorities;especially in agriculture, the Government may wish to review the public invest-ment nolicv with a view to nutting more emphasis on directly nrodt,,rive in-vestments. A set of investment criteria could help provide the conceptualframpwnrk for u a Q ytemnti nrnio4ct scrru,tinvy
XivY Public foreign debt has so far remained at-a rather low level.In December 1973 it amounted to about $93 million or 23% of the estimated1973 GDP, includ4ng a $25 million private British bank loan for r. oiI refin-ery. In the past, Togo received about 80% of its aid disbursements on agrant baTsiS. LWith the n - elment of fe ass4
otffce exc4eding9, on- dbttL O^- >D C [s W- W-F V *- -r,- - V - * x-e- °iJ -a -° - --A -C-& t -4 -MO _ -U
service payments in the past were kept at a low but moderately growing level.The deb- servi.ce ratio average' 3% *i 196670 .- bu increased to 5% i. 197) dutoIIu UL L J/h Lpa 7ymt UUL L aU LUtl Jsantg exp ort UUeto higher payments and virtually, stagnating exports.
- iv -
xv. The economic turnabout in 1974, outlined in para. viii, has helpedimprove, publice finance and1 A,ompQt--i resoulrce mnh1liat1lon Grreint Gove~~rn-
ment revenues for 1975 are budgeted at about CFAF 30 billion -- an increaseof nearly 90% against 1974. Three-quarters of the expect… d revenue arowth
will come from taxes and dividends generated primarily in the mining sector.Current expenditures. ar nplnned to rice hby aont A42 tn almnot CFAF 21 hil-
lion. Substantially higher budgetary savings have enabled the Government tonrepnar the 197q InVroef-mant butdgept- wit-h a rerde leve-l nf nearly CFAF I0 bil-
lion or about three times the average annual Government investment expendi-ture during the last few years.
IV. SECTOR DEVELOPMENTS
xvi. Agricul.ure, the LiAost O -S.iIj,-tJ sector, F.t'y 0 of the acti.ve --
population. Agricultural products account for more than 50% of exports andthic4r contribution to C=DP is close to40%. Tn recent years a.gricul-tual pro
duction seems to have shown little, if any, progress although it is difficult'L irLaale a full assessmer,t because of statistical problems., and unrecordedborder trade. During the First Plan agricultural production rose by 3-4% peryear i'n real teLruis; thLe SLecondu L"dan caAL'Ls 'Lor an annual increase of 6*6 U( inconstant prices, but it seems unlikely that the plan objectives can be met.15ricultural exports stagnLatedU over the last fLew years despite sizeable annuaslfluctuations which were mainly due to changes in both world market prices andle-vels of production and border trade. Partial evidenc suggest5 that foodcrop production -- 75% of total agricultural output --- also tended to stagnate.-Ai nlUImDer CoL tactors account t or tl-U recent souwuWu1 LLI [Xv: UUL [ %, UnLadVULdUe4
weather conditions, a low level of investment and current expenditures, insti-tutional difficulties, lack of project preparation, and unattractive producer prices.
xvii. The Government has recently taken steps to attack some urgent prob-lems. it has created several product-oriented public corporations to helppromote such crops as coffee, cocoa, oil palm, cereals, and fruits. Thisproliferation of development agencies, however, has led to institutionaldifficulties especially with the SORADs (regional rural development agencies).The Government also set up a special rural planning unit in the Ministry ofRural Development to strengthen the central agricultural services. It raisedproducer prices somewhat and continued efforts to broaden the use of fertil-izers and to come to grips with land tenure problems by initiating reformlegislation.
xviii. To help promote exports, the Government is implementing a cocoa/coffee rehabilitation project with IDA and FAC financing. Palm productionhas encountered difficulties and promotion plans deserve reconsideration.Efforts to increase cotton output have not been successful so far due tounfavorable weather, lack of project preparation, and inadequate marketingarrangements. The Government isre-examining the cotton development policy.
v
Prospects are good in certain regions and rotation with foodcrops, especiallyhybrid maize, would simultaneously help promote cash crops and foodcrops.An nAdeuate csinnl-t nf .AnmoctFir fnnrlct-iiffo ic 1 itkolu tf h morn arnT.T;nl--- r-- ---v --- - - - -- -- -- -m grow nproblem unless increased efforts are made. A foodcrop project is being pre-rar.d Iir t-h,M Mn-4t-4mD Raenon wi4thi paossibln Brank Group, f4i-nnann. Prospe,ts
for livestock development including animal traction are limited to certainregions.
rcx.i- E-ve. '.th uh.PAT'Ws.f4".n4 -coSitJ 4 has d o.ewht
in the, last few years, the agency has continued to make. trading- prof itssince its creat-ion In 1965 - £(CFAF 7 billion, cumul.----ave until 173-or. 10% ofbudget revenues)-. -This has been the result of a rather restrict-ive producerprice polic 4y.- - IMh.,aver-eA. t.o- for the COCoa ar.d cof ee -- during1966-71 was close, to 5-0%_. Dur-ing 1966-70., 61% o-f OPAT's investments were intradce "An-i-,u,ry, .'res.ual- d.eop,.ent proects accounte-fo nl`%L. -0 A%A-s JLLU UL tAi,.L-y-, W LLC t-J OV.Vllll JLU OL : LLJULL U L a Ut'LILy V/.
-OPAT a1Lso- lefit:.¢CFAF -4A billion, or 35% -of i,ts total assets,, to the publicsetor. .aa as ofa a-op LOAIUOL 1'7 IS.* J. C-.. D-T''a-i. aa-a.1'. positio-LUI islike..lrty to) 'r,,proL)ve
in vi-ew of the-more fa.vorabl-e cocoa and coffee market situ-at ion, and an..4LL C~ ncras o JUULO produc A_JLO~ -ILJUJU- I_C SIDI~U± WLLLIUUIL UiIUU.LY Lj:L1LJ.tL.iLr, Pa-VU.LL..'ncrease o k;,Iucer- VLXt_c s-sthou-LL IL e fJ easibl,-e: wi:thut- unduly ' v,mi-n- profigrowth. It w,ould, seem th,at OPAT:-polil.ces-.should be better coord:inated withother publ''c sLctuor a-c-tXtVAFt:L.Les t'o promo-te rura'l d e v e lo0pm11 en-Lt.
I'1II'A ?. .4a 4 -. t. ~ -~ J T - Ixx. QV:Ut1,S acL-LVL±tCs -h1av.C ueen lim.LiCU. Lts Loans arounteU U to on ULLy
8% of total cred-its.to the private sector in 1973. CNCA had staffing and£ ~ ~ ~ -_ h_ …t__ _ :___Ir_. 4 -- _ > nnfAfl. -- __k:UUlUil ProueU s, aand all usadLL- LdCtULy CUop e r1 LZ t iO Lrute OU5 as interL-
mediaries resulted in low, credit recovery rates,.
xxi. Major problems still exist and the authorities feel that increasede:forts are necessary to furthner,promote rural development. They recognizethat only about hal-f of the arable land is cultivated. Some structural con-straints such; as regional -soil erosion. and overpopulation, rural exodus, andnon-utilization of water and l-and resources because of riverblindness willDe difficuit.to overcome-.' Areas or furtner action snouid inciude cotton andfoodcrop promotion, pos.sibly-..wi.th the help, of a rural development fundproject. Complex institutional probiems. (central services~, SOuADs, product-oriented agencries,, OPAT, CNCA) deserve 'fu'rther: study. Sta-ffing and fundingof the agriculitura-T credit system, need- improvement.. Finally, pUliC fundingfor urgent rural capital and current expenditures should be increased.
.xxii. The' secondary sector is;s till. .small .but expanding. Phosphate'output. has continued. -to. risej.while construction activities, have, slowed downrecently. New -investments,have been made to increase phosphate-production by25%. The Go-vernments- .. industrialization policy is direct-ed toward promotion-of indigenous.-enterpris,es,, processing- of agricultural products,.and- importsubstitution. The. Government is aLso conslidering a rew major capital-inten-sive projects.. CIMAO- would enable the Government to exploit substantialdomestic limestone resources and to toster regional cooperation. A phosphate-based fertilizer project is still in preparation, while the oil refinery isplanned to start operation by 1977.
- vi -
xxiii. Transport investments remained at a high level of approximately40% of public investment. Large outlays are being planned with substantialforeign aid for the extension of thle Lome deep water port and the paving ofthe main north-south axis highway. Since road transport accounts for 90% offreight traffic, the Government continues to attach high priority to theextension and upgrading of the highway system.
xxiv. The Government has made substantial efforts to expand the educationsystem. Primary school enrollment increased from 36% in 1965 to 56% in 1972.The Lome University was opened in 1972. Education expenditures, however,now account for nearly 25% of total current expenditures despite sizeableparental and community contributions. The financial implications of expansionplans require careful consideration. Moreover, a better adaptation of theeducation system to labor market requirements is needed. The Government hasset up reform commissions to study education problems and draw up proposalswith a view to adapting the system to economic realities. In their discussions,the authorities might further consider some preliminary mission observationson alternatives to the existing structure, teacher qualifications, developmentof education materials, relationship of educational investments to economicdevelopment, and financing and phasing of reforms.
xxv. The Dublic sector spent large sums for tourism development. TheTropicana tourist complex, financed largely by OPAT, was completed in 1972.A 250-bed deluxe hotel in Lome wis onened in f11 197l,. A forthcomingUNDP-financed study should help review sector policies, investment prioritiesand finqnring schemes.
V. PROSPECTS
xXvi. In the ahbpncp nf the next Dveplnnment Plan (197F6-n) flhp misqinn
has prepared illustrative projections which constitute a preliminary outlineof likely future developmlent iunTder rertain working hypotheses. The estimatesneed to be updated as soon as more details are available, especially for theoil refinery, CrTMAO, and CTMB compensation payments.
xxvii. The terms of trade will improve more than 100n in 1974/75 mainlybecause of the tripling of phosphate prices,but in the second half of thedecade and in the ear'y 1980's our pro,ections -sggest that the teorms wil I
deteriorate somewhat because of rising import prices. Better terms of tradeanA 15 1higher* 1 ophate o1.utut w.l4.1 IvL t.he balan cea of p.eJt- 4r- F*I- -t.
few years. Higher export prices will outweigh by far the impact of the largeroil bil whch wil rlse -fror, 5YOf im.ports in1927 to about 1370 ir. 107A/75.The current account deficit, which will relatively decline, will be largelyfi:nanced by foreign capiLtal iLnfLlows, espec4ally for i..ports -1lated rto MArla. dL U u L oil re. --
and the oil refinery.
- vii -
xxviii. GDP growtn is expected to acceierate in 1974/775 mainiy Decause otrapidly rising phosphate sales. Thus, during 1970-75, real GDP growth mayaverage about 6% per year as against perhaps 1-2% for the period 1970-73 alone.In the second half of the decade and the early eighties GDP is projected toexpand by about 8% on average per year or approximately 4% in real terms.National savings will rise substantially in view of high investment outlaysand a relative decline in the current account deficit.
xxix. The expected economic recovery will help improve the public financeposition. The Government has already taken measures to increase revenues inthe original 1974 budget by more than 20% against the 1973 budget. OPAT sur-pluses are likely to rise again in view of the cocoa and coffee market con-ditions even if producer prices and export taxes are increased. The missionhas attempted to establish a rough outline of a financing pattern for publicinvestment for 1976-80. Government revenues are estimated to reach a levelof nearly 20% of GDP mainly through higher receipts from profits of publicenterprises, especially CTMB, and through other revenue growth in line withgenerally favorable economic conditions. Current expenditures are projectedto rise to around 14% of GDP. This will require more stringent control ofexpenditure growth'and a concentration on development priorities. Budgetarysavings might, under these conditions, reach about 5.7% of GDP and total pub-lic savings should reach approximately 7% of GDP as against 3.5% during 1966-70. Debt service payments will rise rapidly to about 2.1% of GDP so that netpublic savings will be 4.7% of GDP -- still a substantial increase over the1966-70 level of 2.9%. Another feature of the illustrative financing patternis the necessary build-up of foreign reserves so a minimum reserve level inrelation to the sizeable import growth can be maintained.
xxx. The projections assume a continuation of foreign aid from diversifiedsources with large proportions of grants and concessionary loans, except tothe two large mining and refinery projects. Under these conditions, the debtservice ratio is projected to be about 5% for the second half of the decadebut could reach an average of 10% in the early eighties when major repaymentsfor CDIAO are due and debt contracted for the oil refinery will still haveto be serviced. The tentative projections, which will be revised pendingfurther data availability, can, of course, only provide rough orders ofmagnitude.
xxxi. In summary, it appears growth prospects are fair and externalpublic debt will remain within manageable limits. Considering the country'spoverty and reasonably good performance, foreign donors should continue toprovide development aid on mainly concessionary terms and be prepared tofinance a large proportion of project costs. In view of the economy's smallsize and the present uncertainty about essential features of large under-takings and about external (border) trade, an increase in conventional publicborrowing seems currently only justified for directly productive investmentswith appropriate self-financing and debt service arrangements. Periodicreassessments of creditworthiness might later lead to the iustification ofsome conventional borrowing for general development financing if economic andfinancial conditions develop more favorably than is presently assumed.
I. INTRODUCTION
1. This report updates information on the current economic positionof Togo. The last economic report (Report N° 34a-TO of December 20, 1972)covered mainly the period of the First Five Year Development Plan (1966-70)and partly 1971. The present analysis focuses on developments during thefirst three years of the Second Plan (1971-75). Preliminary projectionsprovide an illustrative survey on development prospects during the rest ofthe seventies and the early eighties.
2. During the first decade after independence the economy expanded ata fairly high rate primarily as a result of steadily rising phosphate andcocoa exports and booming commerce, which includes unrecorded border trade.Tentative estimates suggest an average GNP per capita growth rate of 4.6%per year during the 1960-71 period. 1/ Nevertheless, the overall level ofeconomic development is still low and GNP per capita, for instance, amountedto only $150 in 1971. 1/ In the second half of the last decade economicgrowth accelerated because of better terms of trade and, in particular, be-cause of favorable world market conditions for the two principal agriculturalexport commodities. cocoa and coffee. During the early seventies the termsof trade worsened substantially and the country's economic and financialposition deteriorated until well into 1973. Very recently the trend discontinuedprimarily because cocoa prices have risen rapidly and phosphate prices havetrinled on world markets- which have more than offset higher imDort costsfor oil. For 1974 and the following years, therefore, a marked recovery isexnpcted bhasd esentinallv on imnroved terms of trade and growing phosphateand other exports.
3. Togo has development potential in a number of fields which shouldpormt longer-tem eornnnmir grnowth nt n cstfifnrtnrv level. Ahbindannt
cultivable land in certain regions offers prospects for increased food andcash crop production. The exnloitation of natural resources such as phosphateand possibly other minerals, especially limestone, should help diversify theeconomyn and make it less vui1nerarhlo to world ma,l,rket f1unrrcitutinns for xpnnorr
products. The country's geographic situation and traditional links witlhnoeihboring oniftris,a combinea with loth lnw finscl levioe on extornal
trade and liberal trade policies, shiould provide continued opportunities forcomm.ercial and other terti-ary scAto-r ac-tiuities.
A- On the other hand, the country is cnnfrnonted-o witth a number of
development constraints, mostly of a structural nature, whichi are difficultto overcome in the short-run. Major obstacles include the small size of the
domestic market and limited overseas marketing facilities, wlhich especiallyhampe r industrial development; uneven populnation distribut4on resultni-n In
regional overpopulation and income disparities; prevalence of endemic dis-eases; the level of edu.ation and technical know-how which. limits the
a/ 1073 World "ank Atlas GDY -cit- in current prices was estimatedat $191 in 1973.
-2-
country's absorptive capacity; urban unemployment, primarily as a result ofthe rural exodus and insufficient adaptation of the largely imported educa-tion system to labor market requirements; as well as rural, seasonal under-employment.
5. Aware of the problems, the Government recently stepped up effortsto broaden the country's absorptive capacity and is devoting more attentionto technical assistance and project preparation, especially in agriculture.Large infrastructure investments in the past have laid the ground for moredirectly productive investments. The Government has actively pursued a policyof multinational regional cooperation (e.g. in power distribution, cementproduction, and common market arrangements) to open up possibilities fordiversification and exploitation of natural resources on a multinationallevel. It has made particular efforts to strengthen its relations with theIvory Coast as well as with the neighboring anglophone countries, Ghana andNigeria. These markets will in the future become more important for Togo'seconomic development. A reform of the education system is being studiedwith a view to better adapting it to the economic and social needs of thecountry. Recent efforts to promote agricultural production and rural develop-ment, to foster small- and medium-sized indigenous enterprises, and to reformthe education system indicate the Government's growing concern for urgentsocio-economic problems.
II. RECENT ECONOMIC DEVELOPMENT
2.1 Overall Development
6. During the First Develonment Plan (1966-70) GDP grew annually by8.4% in current prices and about 6% in constant terms (Table 1). Allowingfor a npnulntion growth of neArlv 3%, real nrr esnita in'rome inctreased bvapproximately 3% per year. This favorable result was mainly due to improvedterms of trade. rnanA p,nnrt npir,a for inQtanpr rnos ahnbot 92% npr vyarduring 1966-70. The balance of payments and public finance position develop-ed favorably. Foreign reserves, budgetary savings, and government depo_itsincreased substantially while consumer prices remained fairly stable.
7. The economic and financial situation deteriorated, however, duringthe first three years of the Second Development Plan (1971-75), IT 1971 cer-tain factors, such as declining cocoa prices, indicated a turnaround in thecoun,trys eco,.omic situattion. La 1971, recorded mercUA9aise exports droppedby 10.5% and cocoa exports by 33%. During the following years the deteriorationaccenCuated, pr-iLLUar1 y bL.eca-use of worsenir.g terms oi tradde, unf avorsbleweather conditions resulting in agricultural production shortfalls and declin-i.-i U0orUdA. tradl.e U r Pe1.U.LLm L . L-y n.ational account est:mLcates suggest that GDP in
current prices continued to grow at rates of around 7-8% during 1971-73.ALt the same time, there are indicaloiRS thllat cUsumeLr prices rse rapidLy.The estimated average GDP growth in constant prices was perhaps of the orderof 1-2% per annum and per capita income in real terms probably declined. 1/|Large segments of the population felt the erosion of the purchasing powerbecause producer prices were only slighLly raised and salary rates (SMIG/SMAG)remained unchanged from January 1971 until December 1973. Regional incomedisparities most likely widened because the effects of the droughts wereespecially severe in the country's already disadvantaged northern regions.
8. Tentative data seem to indicate that the agricultural sector wasparticularly affected by the recent deterioration wnile the secondary andtertiary sectors, especially Government services, continued to expand atfairly high rates (Tables 1 and 2.1). Substantial investment activities in1971 -- with an expansion rate of 39% -- temporarily cushioned the deteri-oration caused primarily by the slowdown of agricultural production and exports.In 1972, both total exports and investment activities declined and the deteri-oration continued well into 1973.
9. Agriculture's contribution to GDP continued to drop and now accountsfor less than 40% as against 43% during 1966-70. The secondary sector's shareincreased slightly as phosphate production continued to rise and some industrialenterprises started operation. Flourishing commerce and growing Governmentexpenditures contributed to a more than proportionate increase of the tertiarysector.
1/ In the absence of a GDP deflator, the mission continued to use consumerprice indices as a rough proxy to estimate real growth.
Table 1: GDP, 1966 - 73
CFAF billion average annual growth rate (%) as a percenta e of GDP1966 1970 1971 1972 1973 1966-70 1971 15772 1973 1966 1970 1966-70 1971 1972 1973
10. Highly tentative mission estimates indicate an increasing level ofinvestment in recent years (Table 2). Fixed investment now amounts to about15Y of G-DP -A gross Aomesti4
vities were particularly high in 1971/72, mainly for infrastructure projectsin Lome. Along wlt growing f4oreign ald disbursem.er.ts, expende141. foz exter-
nally financed investment projects increased. Higher investment outlays,thlerefore, tempered somLW-Lhat the deteriorating effecLts resulting fromCe. tworsening external trade position. But these high investment activities wereonly possibble at thle expense of a 'large udrawdo-w of r es-erJLves and -an increasing- - -
inflow of external assistance.
11. National savings wlhich amounted to close to 11% of GDP during 1966-70UroppeU in recent years accordUiLngr, toL 'A.rgLhLy prL LJrL,narL y esir,e. IhICl L iLsL LU=
lows from the apparent increase in the current account deficit -- an indicationoLU grow1'Xg U'epeiiueiice on LUoregn fi 'LLldllL i Ig uk UUIoest L1c ±L1VetLmetBIoL . DULII e
investment and current account estimates are subject to wide margins of erroruut a deteriorating trend IS ev'dentL.
2.3 Balance of Payments
12. Since part ofL Togo's traude with neilghb')orilng countriLes bi sUL U L -
cially recorded, balance of payments statistics can only be rough approxima-tions. With this note of caution, it appears tnat total exports declined in1972 and 1973, especially cocoa sales which were the prime source of theexport boom during the late sixties (Table 3). Coffee and phiosphate exportsgrew moderately but they could not offset the cocoa shortfall. The exportcommodity concentration remains nigh. About 9u0 or exports is accountedfor by the three leading commodities (cocoa, phosphate, coffee), which indi-cates the country's dependence on a few highly fluctuating world markets.
13. While exports declined, imports continued to increase. Importsassociated with higher external aid inflows (capital and certain intermediarygoods) and rising import prices contributed to this import growth. Food im-ports, including unrecorded imports, seem to have risen as a result of vir-tually stagnating domestic food crop production due to unfavorable weather,but are still relatively small (Tables 3.4 and 3.7). The country's principaltrading partners remained France, the Netherlands, and Germany which togetheraccounted for slightly more than 50% of total external trade. Some non-Europeancountries such as Japan, USSR and USA, somewhat expanded their trade sharewith Togo.
14. According to official statistics (which include estimates for un-recorded trade), the trade account was virtually balanced during 1966-70whereas in the following years it became increasingly negative (about 3% ofGDP in 1971 and 11% in 1973). Taking into account the traditionally negativeservice balance, the resource gap must have risen markedly. The average an-nual resource gap of CFAF 0.7 billion (1.1% of GDP) during 1966-70 increasedto CFAF 8.9 billion (10.3% of GDP) in 1972 and an estimated CFAF 13 billion(14% of GDP) in 1973.
15. The widenine resource gap was lareelv financed by a growing inf1owof foreign aid (transfers and net capital movements) mainly from France andFED and a substantial drawdown of foreign reserves largelv acctmiilated duringthe years 1966-70. Thus net foreign assets dropped from CFAF 10.3 billionat the end of 1970 to GFAF S-8 billion in July 1Q73 or from a level of 6 to
less than 3 months' import requirements. The loss was 38% alone from July1972 to Tuly 1973.
2.4 T0rmQ of Trade
16. As aresult of favorable cocoa and coffee prices and only moderatelyrising import prices, the terms of trade improved by about 2% per year during?0966-6Q (Tabe1 4). 1---in 1970-72 however, they wosne yabu O/ each--S, lA- .L h~ ' SA LL J~' -_/, LIJ- -V L * I..LLO WItS.O -L,~ LAY aUt,lAL. I Wif CC.LI
year, largely because of both falling cocoa prices and rising import prices.The situation started to Improve only by the end of 1973. Thechngewa
- ^W 1 |W C6 |V& i: CS * U L. JoIIl V G~ I&z VZ IP^ C^X V J |Ll -_IC LLLr,= WCLO
caused by a turnabout in the world cocoa market and continuing favorablecoffee priLces -whLich mlr re thar. ou-Weig L'eA the esti-.aed i.,pr price bos of__1--... JA A. ~ WL.LLI LIli £ LLLLL IU LW..L 5 I~IL LAII ~ L..JLMOC L. ~U .LAIjLF L L. IJL 4A; LUUU. L,. U]J.
8% in 1973. Losses in foreign exchange and income from the decline of theterm.s oIf tradue were substantial. Lentative mission estimmates suggest thatfor the period 1971-73 the deteriorating effect on total income amounted toapproximately 6%1 ofL GDP.
C..U J 1 'I fyUii o UL y V±UILI .
2.5 onetary Developti.enLts
1 Th* L[ e d IeteriLoratilon of thle bua±Lance of payiiLents .led to a sizeable reduc-tion of net foreign assets in recent years (Table 5). Despite moderate creditexpansion to the private sector, the overall net domestic credit expansionrate reached high levels because of the Government's deficit spending alongwith a decline of public deposits. Tmnus, domestic credit expanded 59% in1971 and 37% in 1972 as against 21% per year on average during 1966-70.Money supply increased moderately since the expansionary effects of domesticcredit were partly compensated by the drawdown of foreign reserves.
18. Effective January 29, 1973 the BCEAO raised the basic discount rate,established in May 1962, from 3.5% to 5%, and the interest rate structure wasmodified accordingly. So far this adjustment has had no discernible effectson savings and other deposits, partly because the observation period has beenrather short. More importantly, however, interest rates on internationalfinancial markets meanwhile rose to levels which by far exceeded the relativelymodest discount rate increase.
19. Besides four commercial banks, a number of public and semi-publicinstitutions are active in banking and/or development financing. The BTDcontinued to invest primarily in housing but recently became more active inlending to industry and handicraft. The agricultural credit institution(CNCA) faces a number of problems which are discussed elsewhere (para. 43).The national investment fund (SNI) started operation only recently and adetailed evaluation is not yet possible. The Agricultural Marketing andPrice Stabilization Agency (OPAT), the Social Security System (CNSS), andthe National Savings Institution (CNE) also provide development financing.
20. The domestic nrice level -- an Pexnr3oAd hy the African and Europ-ean consumer price indices -- remained fairly stable during 1966-70 with anaveraze incrase nf nnly 1-2% per vyar (Table 6). Sinew thep however.consumer prices have soared and inflation rates have been in the neighborhoodof 7% per year. wood prices particularly hnve ri4e at rates of nearly 9%per year. The main causes of the price rise are rising import prices anddrought induced food shortages.
Source and footnotes: jkppendix tables 9.1 and 9.2
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III. PUBLIC FINANCE POSITION
21. Thiring the first plan the public finance position improved markedlythanks to the economic boom of those years and the austerity policy until196R8 Curirent ,reauneiiQ raos at almnat twice t-he 'nP expansion rnteo and e-
ceeded current expenditure growth (Table 7). Capital budget outlays remained£1t_ a low 1 ova l eve n l S ibdgetary eAvincsc namount-ing to 1Q% of cuvrrent revenus or
2.1% of GDP, improved the Government's liquidity position. Government depositsrose at an annual average rate of 24%. Moreover, the Agricultural Marketingand Price Stabilization Agency (OPAT) achieved substantial trading surpluseswhich provided additIo-al para-fiscal savings.
3.1 Curren.t 1.eve,ues
22. Current revenues contInued to rise in 1971/72 at an average rate of16%, close to that of the years 1966-70 (Table 7). The revenue growth wasachieved .ainly because preJvilous tax mL.easures sr to generate additionalrevenues (for instance, an increase of sales taxes on domestic production, con-s-,,ption, and in.terL.ational traLe; taaation of OPATlI. 's profits; iJLJproved taxcollection; and expiration of tax holidays). While foreign trade taxes stillaccount for r,-.ore than 6%/ of G- ver.LLIenL1t r eeipts, tLh-e recent rever.ue growtLL1
occurred chiefly in direct taxation, indirect taxation on domestic transactions,anud r,on-tax GoverUl-nenLt 1inLcome. Tlius, overa'Ll taxat'Lon .Lncreaseu Lirom aUbout11% of GDP in 1966-70 to 14-15% in recent years.
23. The major impact of the recent economic deterioration on public fin-ance occurred -- after a certain time lag -- in 1973. Preliminary estimatesfor the first 10 months of 1973 suggest a drop in revenues in the neighborhoodof 18%, while the 1973 budget still projected a growth of about 9%. Apparent-ly, economic conditions deteriorated more rapidly in 1973 than anticipated.The revenue shortfall was a major reason for the drawdown of public reserves.OPAT's financial position deteriorated as well, in line with worsening termsof trade and declining exports (para. 42).
3.2 Current Expenditure
24. Following relaxation of the austerity policy in 1968/69, current ex-penditure growth accelerated. Expenditure outlays rose from an annual averageof 9% of GDP in 1966-70 to 12-13% in recent years. Personnel expenditure(wages and salaries) which accounted for more than 50% of current outlays wasamong the most dynamic factors. The last general salary increases took placeJanuary 1, 1971 and January 1, 1974 and were 10% each. The recent boost ofthe wage bill, therefore, is not primarily the result of general pay increasesor lenient promotion policies but the consequence of an increase in the numberof Government personnel (Table 8). During 1970-73 the number of Governmentemployees rose at an annual average rate of about 18% as against nearly 7%per year in 1966-70. Prima-facie, this upsurge seems difficult to justifyeconomically, but the mission is not in a position to make a detailed
Table 7: profile of Pubtlic Fina-ce 1966-75 ~
- - E--'AFbilliut. Ae. Bugtdaa ---- 5Lpirc-:I of GDP ____- ..42r4 annual erwi __t_____
evaluation on the basis of available information. The Government may, how-ever, wish to review its personnel policy and manpower needs in iight of thefinancial implications and in relation to Government functions. In the 1974budget the Government planned an overall increase in employees of 9.2%0, buteconomic services received few new recruitments. In view of the recurrentnature of most personnel expenditures, these outiays introduce an eiement orinflexibility into public finance, especially during periods of economic slow-down. increased salary rates in 1974, combined with the overstafrlng willboost budgetary allocations further. If continued unchecked, this. developmentcould hamper efforts to curb current expenditure growth and to make fiscalpolicy in the future more flexible.
25. The recent expenditure growth appears primarily due to higher averageoutlays for social services, particularly education and public health. Themission has not sufficient information to evaluate the merits of these in-creases from the point of view of development priorities. Further analysisis needed to determine, for example, which types of health care -- preventiveor curative -- benefited more from tihe higher budgetary allocations and whichtypes of education received the bulk of the higher appropriations. Generalservices and debt service payments also absorbed increasing proportions ofpublic expenditure. On the other hand, appropriations for agriculture remain-
ed at a low level of only 6% of total expenditure. In view ot the dynamismof expenditure growth, the Government may wish to review expenditure policiesin line with development priorities, including the planning of recurrent costs-in order to achieve a high degree of fiscal flexibility. Recurrent costs forschools and hospitals, for instance, tend to be quite high.
3.3 Budgetary Savings and Liquidity Position
26. Average annual budgetary savings amounted to 2.1% of GDP or about19% of current revenues during 1966-70. Tentative estimates suggest thatthis level was generally maintained in recent years even though 1973 figuresare likely to show a marked decline for this particular year.
27. The overall cash balance which showed a cumulative surplus ofCFAF 1.8 billion during 1966-70 became negative in the following years primar-ily due to significantly higher capital budget outlays. The cumulative deficitfor 1971-73 is estimated to be roughly CFAF 4 billion. The annual cash deficitswhich probably exceeded 10% of current revenues on average, inevitably reducedthe Government's liquidity position.
28. Government deposits which rose at an annual average rate of 24%during 1966-70 fell sharply in 1971-73 (Table 9). They declined from a peakof CFAF 4.7 billion at the end of 1970 (47% of 1970 revenues) to CFAF 1.4billion in October 1973 (10% of 1973 budgeted revenues). Treasury depositsof semi-public agencies such as OPAT, Pension Fund, and Postal System declinedfrom CFAF 3.3 billion in 1970 to CFAF 1.7 billion in 1972.
29. The Government's capital budget provides only a small proportionof total public investment financing. During 1966-70, budgetary sourcesamounting to an average CFAF 1 billion per year (1.5% of GDP) financed 20.9%of total public investment (Table 10), while OPAT's contribution amounted to8.6%. Capital budget expenditures rose significantly in 1971-73, however,reaching an estimated CFAF 3 billion per year or roughly 3% of GDP. A largepart of these appropriations was used to finance infrastructure investmentsin Lome. In the absence of greater budoetary savings, the domesticallyfinanced investment boom led to substantial cash deficits and to a deteriora-tion of the Government's liquidity positioni.
30. Total public investment amounted to about CFAF 24 billion or about7.8% of GDP during 1966-70. The bulk of public investment, i.e. almost 70%,was financed from external sources (Table 10). Principal contributors wereGermany (30% of foreign financing), FED (27%), and France (19%). The majorpart of public investment was earmarked for infrastructure (57%) whiledirectly productive investments accounted for only 29% (rural development18%; industry and trade 11%). Administrative and social services projectsabsorbed 6% and 8%, respectively, of investment funds. Complete figuresfor more recent years are not yet available, but partial data indicate acontinued emphasis on infrastructure including administrAtive/social serviceinvestments vis-a-vis directly productive investments. Both the Governmentand OPAT 1/ spent only small amounts for investments in rural development(10% and 6%, respectively, of their total 1966-70 investment outlays). TheGovernment financed mainly administrative and infrastructure projects (63%of capital budget outlays), while 62% of OPAT's investment funds were channel-led into industry and trade. In view of development priorities, especiallyin agriculture, the Government may wish to review the public investmentpolicy with a view to putting more emphasis on directly productive invest-ments. A set of investment criteria could help provide the conceptual frame-work for a systematic project scrutiny.
3.5 External Public Debt
31. Public foreign debt so far has remained at a ratlher low level. Atthe end of Novemher 19731 it amounted to t&8 million or 17% of the 1973 GDP.Togo has received about 80% of its aid on a grant basis and foreign loanswere extended on nredominantlv soft terms. With a grant 1lpment nf foreignassistance exceeding 90%, debt service payments in the past have been keptat a low but moderately growing level. The debt service ratin aeraogeA 1%
in 1966-70 but increased to 5% in 1972 due to higher payments and virtuallystagnating exports. The agreement concluded in December 1973 � or the con-struction of an oil refinery foresees private British bank financing amounting
to about $25 m, iil 0 n a t _om l.me r c ifa terms.. s Foreign publlc!- and -ubicl guar-anteed debt will, therefore, increase by 37% to about $93 million or 23% ofGDP and will entail higher servince p-4entS dependi4n on the r--n.ment patern.
Not all pertinent details for this project such as financial and marketingarrangemenLts are kno-IU7nIas yet.
1/ Cf. Dara 42.
Table 10: Flablic Investnent and its Finaric , 1966-iC)
CFAF billion as a percentage of total publ.ic investmentOther Other
Sources of domestic Total. domestic Totalfinancing public domestic External public domestic External
Sectors Glovernment OPAT services financing financing Total Government OPAT services financin& finalainl Total
32. Agriculture is the most important economic sector employing 80% ofthe aettve nAnpIolation. Agricultural nroduc-t-s, mainlxy coca andA c-ffee, ac-
counted for 57% of recorded merchandise exports in 1972 and the sector'sestimated contribution ton GDTP 4n 19?2-73 amounted to about 38%. Agricult-rnl
production seems to have shown little, if any, progress in recent years, al-though itfl- A4,,CUI+. is df lto .make a full assessminent because of l;mited aA.. partlyconflicting statistics as well as unrecorded border trade. Developments in
., r-I mi~marketed cash crop production are shlLo-wn in Annex TabUL et. -) .ine recent unfavor-able development stems from a number of factors including (a) poor weather condi-tions, (b) lac'. ol project identification andU preparatiLon, (c) iInsuff'c i LcLentLyattractive producer prices, (d) low level of investment and current expendi-'Lures, andu (ke) Istituti6n71a'L Ud1iffiCUltLieS.
A. L Lcu±Lura e:-porLs n-ave teLHeU to stagniate Udespite sizeablleannual fluctuations that were mainly due to changes of world market pricesandiU vaLy' ng levels of UJo UuUestjLc production anu border traue Aftlex TaDbLe I .).
The value of cocoa exports has continued to drop since 1970 because of decliningvolume and deteriorating prices. Coffee production decreased from about14,000 t in 1969-70 to around 7,000 t in 1971-72 and cotton production fellfrom 10,000 t in 1967/68 to less than 6,000 t in 1972/73. Estimates forfood crop production which account for 75% of total agricultural output areparticularly weak. Partial indications suggest that food crop productionis below the level of past estimates and that an adequate supply of domesticfoodstuffs is likely to become a growing problem unless increased effortsare made (para. 37). A foodcrop project is being prepared in the MaritimeRegion for which Bank Group financing is sought. The nutritional level invarious parts of the country does not reach FAO minimum requirements, and acontinuation of the existing trend would tend to reinforce regional disparities,especially in the Maritime and Kara regions where scarcity of tillable landis a constraint and in the Savanna region because of the lack of rainfall(Table 11).
34. During the first plan (1966-70) agricultural production in realterms increased by an estimated 3 to 4% per year. The second plan (1971-75)calls for an annual average increase of 6.5% in constant prices. However,on the basis of preliminary indications and projected development for theremaining plan years, it is unlikely that the objectives will be met. Duringthe first plan only 18% of public investment and 6% of current expenditurewas spent for agriculture. CNCA's agricultural credit outstanding in 1973amounted to 8% of total credits extended to the private sector. Partial datafor recent years suggest that the Government has not made a major shifttowards earmarking more funds for capital and current expenditures in therural sector. The second plan foresees only 13% of total public investmentto be allocated to this sector.
Table 11: Selected Agricultural and Regional Indicators
- regeneration of - intensification cotton/- migration programs for intensification - small scale"terres de barre" food crops - intensification and millet, sorghum, irrigation (RDF)
- rice with small - migration programs extensification cotton/ rice (RDF) - stock building policyscale irrigation food crops - migration programs for cereals
towards central andplateau
Source: Data provided by 1bgolese authorities.
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35. Cocoa yields have been low (230-300 kg/ha) due to a lack of main-tenance and new planting, as well as to capside pest and swollen shoot attacks.However, prospects are relatively good because of favorable export prices andthe success of the SRCC campaign against capsides and swollen shoot virusdisease (SSVD). Ongoing rehabilitation actions including an IDA project shouldpermit future production increases. The IDA project will lead to a gradualincrease of cocoa production by the end of this decade (less than 1,000 t peryear). From the mid-eighties onward the expected additional production willbe 4,400 t per year 11. Average coffee yields (130-150 kg) have also beenvery small due to a lack of plantation maintenance as a result of insufficientproducer prices. The rehabilitation project with Bank Group financing willstart producing by the late seventies with less than 1,000 t output per year.By the mid-eighties the proiect will yield an additional annual production of4,800 t 2/. In view of long-term market prospects for cocoa and coffee,other planting proiects should only be undertaken after careful consideration.
36. Palm kernel and Dalm oil nroduction has suffered in recent yearsfrom marginal ecological conditions and insufficient rainfall. Local scar-cities have led to increased competition between traditional buyers and SONAPH'sAlokoegbe mill which had to operate below capacity. SONAPE's smallholdernolicyv such aA redistribution of existing Dlantations to small farmers, andoil mill expansion plans, therefore, deserve reconsideration. Copra produc-tion has ron-iderahlv dprrpnsed due to the snread of Kaincone disease. The
control of the disease would require tests for new varieties and a replantingproject of hybrids.
37. Efforts to increase cotton production have nnt been s,,rrepfun
so far mainly due to unfavorable weather conditions, lack of project prepara-tion, anA inndqte marketing arrangements. SORADs took over thp rnttnncollection from licensed buying agents by the late sixties but had insuf-ficient staff for the collection teams. These and other marketing diffi-culties caused the authorities to abolish SORADstmarketing monopoly. TheoverL,nnLent is reCkonsidUerling thI. e cotton -14-velomnpliy A new product
oriented corporation is likely to be set-up to promote cotton productionaIIU mUarL CLeIng Ull a II onLUIwiLuC uas i. . UPrLoses f4- cUottn UdeCVelopmet ar e
good in the plateau and central regions. The cultivation of cotton in rota-tiLonL with Loorops woulUd heLp pror.note si a cUash and ILAU----p produc=L
tion. A shift from general programs to centrally planned projects is neededwith area and input control and adequate organizational and marketing arrange-ments. Extension services need strengthening and producer prices should bereviewed to provide greater incenti-ve to LaLruters*. RiBk-LeuciLLg [LIeasULres LUL
farmers should include the promotion of precooperatives.
1/ The marketed production during the crop year 1971-72 was 28,200 t and18,600 t during 1972/73 (Annex Table 7.5).
2/ During 1969/70 and 1971/72, the marketed production was somewhat lessthan 14,000 t per year, but dropped to around 7,000 t in 1971/72 and1972/73 (Annex Table 7.5).
- 23 -
38. Prospects for intensified cultivation of hybrid maize varietiesare good, in particular in rotation with cotton. SorRhum and millet yieldsare low (about 0.7 t/ha). The development of high yield American sorghumvarieties raises marketing problems because of different consumption (taste)patterns. Prospects for yield increases are subject to systematic varietytrials and genetic improvements. Manioc is mainly cultivated with inter-cropping in the southern part of the country. Yields seem to have decreasedin the Dast due to an overexploitation of soi]s. The Govprnment rpepntlvraised producer prices which led to a substantial increase in the supply ofmanioc. The starch factorv at Ganave which in the nast haR workpd hplnw
capacity is now operating close to full capacity. Better capacity utiliza-tion combined with hioher outnut nrices have helnpd imnrove the fartory's
financial situation.
39. The slow development of livestock is due to pathological problems(trvnAnn4rani:Aic ann nPerpnnnTnmnni)_ corinnlrir1 conQtrniJntQ :nd nrgani7z-
tional difficulties. With the exception of the North, particularly the Savannarpaion, prospects for lIvestock development are restricted. Experience withpilot projects for animal traction was not encouraging except for a projectin the _A_.U --... n- which. received BDPA assistan^^ (about 1,300 teams ofoxen in 1973). Further efforts should probably be limited to the North wherethe constraints outlined above are less stringent. Some ranching opportuni-ties also seem to exist which need further study. Togo is unable to satisfyits present and future meat demand without imports, and poss-bilities forlivestock development deserve further exploration. The construction of aslaughterhouse with cold storage fn414tjes in T Lome started recently. This
O L .8
,S.W LA5C . LtL FMO.A S b 0.. J.. J &* --- O a. t. t..L L.
project, which will cost about CFAF 0.5 billion, to be financed with FAC/CCCEass4stance, will 4i.prove 1lvestock and meat marketing
4t. TheCL rcenly est O a U..._..ec.ablihe pl .omeApan.yu, "La LL1Togol 4.aise -- TO As PV-h-
promotes semi-industrial coastal and lagoon fishing. The construction of afishing harbor and partial use of the -----s-to s l t f-ciltie
are unlikely to meet domestic demand in the near future.
41. Forest reserves in Togo are insufficient to meet present andfuture tme eur.ns A repla.tir. prora by ODE is -nde-way. B2e-I. ULL~L. LIUICL A. CLU.LL.CULCILLL.0 I L~ .Fj.LMLIL.L-L&L jJL.J
6LI.CII '. JI,K L OL.. ULLU~_LWCXY
fore undertaking larger reforestation projects, the economic and financiali_ILP 4.J.LdLL.LVLI0 __ _L JU L_ _L .LU.y ML..AU.. CU
and marketing agency (OPAT) has deteriorated in the- last few years. Neverthe-less, UU-e tUo a genrCall yt L. LLL. .rictVe prLoUdUCeL prc LL UA.L.k-y , it has maue tradu
ing profits ever since its creation in 1965 (Appendix Tables 7.1 and 7.4).UnLLL 173 ciIJ ..uLaVt ' Lv-te Lr.Lading surpluses am.oun.ted 'Lo about CFAFI2 I biLJ.LiLo oL
10% of Government budget revenues. Overall cocoa and coffee taxation, includ-ing OPAT's price differentials was high. Preliminary estim,ates suggest that
- 24 -
the average tax burden 1/ for the cocoa and coffee farmers was close to 50%during 1966-71. OPAT's investment nolicv which (like its nrndit-pr pricepolicies) is principally determined by the Government, has mainly favorednon-agricultural nroiects in the past (nara. 30)_. MforPnvPr OPAT nrriimiilatpdsizeable financial assets which were partly held abroad. It provided long-tPrrm IAnan tn -hp public scprtor amounting ton rPFAF A hillion nr 315; of OPAT'stotal assets as of September 1972. OPAT's financial position is likely toimnrovey again in Uie-w of the m.ore favornhal cocoa and coffee mark-t sltuaion,
and an increase of producer prices may be feasible without unduly limitingprofit growth. It would seem that OPAT's producer price and financial andinvestment policies should be better coordinated with other public sectoractivities promoting rural development.
43. The activit4es of the National Agricultural Credi4- Tnstu-4t-u.e (CNCPA)
in the past have been limited. Total loans outstanding as of September 30,1973 ,amounted to only CFAF 0.7 billion. More than 90% of CNCA lending wasshort-term credits. CNCA suffered from a lack of experienced staff and ashortag e of funds on terms com.ensurOate with ngriculturnl ln 5 .otions.
A new management was recently appointed. Most of CNCA's credits were chan-neiled t,.o t,h".e fas. er- t-h,1rough +the, SODATJS which. act.ed as finan.ial inte....ediare.L
This cooperation has not proved satisfactory so far. Defaults and arrearswere reportedly 11high -a CNCA's fn4-1ania -4sitionA-4-f de oate. Tn 10972
16% of CNCA's portfolio consisted of overdue debts. CNCA's collection per-form.ance hnas lbeen poor, particularly for seaso --- al and muaki loans which
should generally not be difficult to recover. A reform of the agriculturalcredit system, seems necessLary, nLL part icular, the_ r o between T.1A
and the SORADs, such as the division of responsibilities, the supply of
a'*qu' I fncialt.UVI rsources 0 aAL C' CL LL. cICLLLr,LLLLIL L I ON C Ld
44. Te Gover.-uent Lhas recent'ly taken 1 .I.A th intatv Lto Lattac sevteral
urgent agricultural problems.
(i) It has created a number of product-oriented public corpora-Lions to nelp promote particular crops sucn as coffee,cocoa, oil palm, cereals, and fruits. It established SONAPHIin 1968 to promote palm oil production, and the company hasbenefitted from financial assistance from FED for its plan-tation programs. SONaPH seems well managed but its pro-
motion program has encountered some difficulties (para. 36).SRCC, responsible for cocoa and coffee development, wascreated in 1971 with financial and technical assistancefrom FAC. SRCC's performance has been, and continues to begood. Management and staff are efficient and FAC grants havehelped keep its financiai position sound. Other corporations --ODEF for forestry, Togofruit for fruits, Togograin for cereals,
1/ Export taxes and OPAT levies, i.e. difference between the actual exportprice and OPAT's total cost price: producer price plus export taxesand OPAT 1PviPcs.
-25 -
and Togolaise des Peches for fisheries -- started operation onlyrecently and a comprehensive assessment is not yet possible.It appears that staffing and financing need to be reviewed andprobably improved. Moreover, the proliferation of developmentagencies has tended to create institutional difficulties likedivision of responsibility! especially with the SORADs.
(ii) The Government set up a special rural Dlanning unit in theI4inistry of Rural Economy, staffed with Togolese and foreignexperts. to strengthen the central administrative services,to prepare projects, and thus to increase absorptive capacityin agriculture.
(iil) Some nroducer Drices. for instance, for cocoa, coffee. eround-nuts, and cotton, were moderately raised for the crop years1972/73 and 73/74 (Annex Table 7.1). The increaRes were lessthan 10%, except for coffee. The coffee producer price whichrpmainpd umnchanged from 1967/68 till 1971/72 was raised by about7% in 1972/73 and 12% in 1973/74, but the present price of CFAF90/kg is still quite lowl
(iv) The Gover.nment has initiated measuirpe to make ideipr uise offertilizers. A first program to provide subsidized fertilizersto farmers has been nreparard and the implementation shoulstart during the crop year 1973/74. Total fertilizer subsidyfor 1973/74 -4ill be about CFrA 38 million.
(v) Th-e Govern.ent, with f .o.r. techni-cal assistance, ha- madeefforts over the last couple of years to come to grips withlan. tenure problems. which constitute a -i-aj ----tran forvirtually any expansion programs such as migration andsettlCment scheres. In January 1974 a land tenure 'law wasadopted. It stipulates, among other things, that non-cultivatedland b-elongs lo -le "National Land Tnheritance" tv rilon.L I U J.UL6 L U L i C1 10 U_ LULO " Ottb Li Lt L .1. LIL%C \ S. LOIUt iti)LILC
Foncier National") and can no longer be claimed by privatesiLng'le or collective owners. Thls la*w ,ee-S to prvid abasic precondition for the preparation of migration settle-ment scheme wLichL in ' tuL ai 'CxLea Lt oJV L L C iur. u CdeVe:L -
ment,potential, especially in the overpopulated Kara andflOLiUL.LL. LtRLUiLCyMarti,. regLiorouncnsrsns.r
45. Major problerms still exist in agriculture. Various constraints areof a structural nature and, therefore, particularly difficult to overcomesuch as regional.soil erosiLon andU overpopulation, rural exouus, anu non-utilization of water and land resources in the North because of riverblind-ness. Since about half oL thne arable land is not yet cultivated, opportuni-ties seem to exist, for instance, for resettlement schemes to alleviatepartial overpopulation and soil erosion and to heip acnieve a more baianced
- 26 -
regona,-rl Adevelop,~ment. Theo (2rvirrnmont f1iiilru ti-ne advnntage nf tho npocslbili-
ties to increase the production of cotton to be cultivated in rotation withfood crops. In this way, agr4 culturnl production and exonrts -an be diversi-fied and the supply of foodstuffs improved. Special efforts are needed topromote food cr.oprui in orde 4mprove tho 14vin c 4to4ndi4on flarge segments of the rural population. To this end, the authorities aretakn 1 toc S- f regona requre..et to- prpr a ,.ajo inputfor arraLO..1Lng L'W..JN Ut 3. C_6.LVLLCX.L LK. C.J-s.L -,LI.IO U. L.. FJ. t.-,aA -. a .ntj -s -LV-A LJ CLSI.a
development fund project. Such a project could be a useful multiregionalcomwpl>IeLent to rehabUi.Li.tLaLC.LUiL prLUog.ams for c.ash. crFo w--icLL *-i-...y
fined to limited areas such as the Plateaux Region. Further progress inrural UeveveLopiLt ie s aLso depe..dent or improvemLLents in .1hle organizationalsetup. The institutional problems seem complex and sensitive and it may be
O12Lt.~CL.L~ susworthwhl tLLC o Vobta_in expUert advice for partcula organizationalissues.
'460. Tentati-veLy, the UmissiUS on suggests focusing furLe. LL aa lysis othe following points: (a) reinforcing the (central) services of the Ministryof Rural Development to establish and control develoPment priorities for pro-jects and programs; (b) gradually converting SORADs -- which to date have notbeen a particularly effective mediuml for development 1/ __ into regional agri-cultural executing agencies for well-defined and monitored projects; (c)linking SORAD financing to specific project imL1plemen.tation; (d) fosteringcommunication between SORADs and central services in a feedback system thathelps identify projects.
47. Some other fields deserve, in the mission Zl view, high priorityin the Government's agricultural policy.
(i) Agricultural credit needs improvement (para. 43). Arrangementsfor providing farm credit under the IDA coffee/cocoa projectare designed to help CNCA develop the expertise needed tocarry out its role;
(li) Producer prices for export and food crops should be increasedin view of the following: the virtual stagnation of mostproducer prices in the past few years despite rising inflationrates, the need to raise production incentives and rural incomes,the current and expected export prices for major cash crops,and the level of OPAT reserves. An increase appears particularlynecessary br coffee and cotton;
(ii±±j Hiigher appropriations for agriculture will be necessary toprovide funds for a probably increasing number of projectsto be identified and prepared with the help of the newlyestablished planning unit in the Ministry of Rural Economy.Special emphasis should be given to the adequate financingof programs to increase the absorptive capacity in rural areas.This would include feeder roads, wells, sanitary control, otherbasic infrastructure, and agronomic research and studies.
1/ Causes for the failure are many, but a shortage of trained manpower,inadequate direction, poor project and program formulation, and limitedfinances have been significant constraints.
- 27 -
4.2 Sprnndary Sector
48 The scorndary Tnrntr i9 still small in matrn-pronnmir term hiut has
been growing rapidly. Its expansion rate in recent years exceeded GDP growth.Phosphate production increased unabatedly while construction activitiec claweddown as the Government curtailed public investments. Power generation continuedto rise (Appendix Table 8.1). Some rinsitries with an ineastin Admand are
flourishing, e.g. the brewery, and some were able to overcome initial diffi-culties, e.g. textiles. Other industries are encountering marketing problem,ls(marble processing) and raw material supply shortages (food processing indu,,s-tries) A 4flour mill started oerai4on n4 ear 1074 and a -nning factory.A.JtL lLL.A 0.0 -. - - -_T -II- " --L "Lt EltbC.1 .7
for tomato and pineapple juices as well as some smaller projects in the in-A.. oae _ 4 ..1 ({ an ArA a'% .,r a nP *h 19 Tm nnA _t in _A at in ttAn Cnl, s9r 9A 4.,? nfl? ocSO1. .LO E.L G_ 1.Ot\ a. S 1L W ~ 1. L L Clto z.V._k01. FLA L aOS P. 1 .J. _LaLoM
particular problems in view of the small size of the domestic market.
49. The Government's industrialization policy is directed towardsthIree pri9nciLpa'L obJeclCives : promotion of sml.L- an .A.. edli-sizeA ind A genousenterprises; processing of domestic agricultural products and exploitationo mler__rsure an A . . u--on ..:_ or_ _1ca _A __ A_U-A. Iu 'LL C L 1UUUL >, dIU LMFU LU L E.LLL ±LXIL U L tUl>8l0UIl.A X ULL rVUU,D.
In the past few years, the Government established various institutions topromote small- and [mUedium-sized 'Loca±l businesses. I;t has crae a naL.ional.promotion center, as well as a participation and guarantee fund within theSLNI. Lt bUorrowed recent'Ly fLror GermaLny andU the USOVA (thie 'Latter thlroughl tLhIe
Conseil de l'Entente) to finance small business projects through the BTD.The promnotion program is still 'In an ear'Ly experimental stage. LLe resuLts
in terms of creation or expansion of indigenous enterprises have not appearedsatisfactory thus far.
50. New investments were made in phosphate mining to increase annualproduction from the present 2 million torts to about 2.4 million tons by1974/75. For this expansion CTKb obtained a loan of CFAF 375 million fromADB through the BTD. CTMB's sales and profits developed favorably duringthe past few years (Appendix Table 8.2) and market prospects for phosphateare favorable (para. 58). Implications, if any, on CTMBts activities, resul-ting from the February l974 nationalization, need to be further assessedwhen all pertinent details are known.
51. The Government is considering a few major capital-intensive indus-trial projects. First, the CIMAO ciinker project would enable the Governmentto exploit substantial domestic limestone resources (thus diversifying theeconomy and foreign exchange sources) and to foster regional cooperation il.
1/ CIMAO's total cost, including infrastructure, is now estimated at around$125 million. The proiect consists mainly of a clinker plant nearTabligbo with an annual capacity of 1.2 million tons to process highaualitv limestone recently discovered near Sika Kondii. The operationwould be jointly sponsored by the Togolese and Ivorian Governments anda private promoter.
- 28 -
The same may be true for a second oroiect. a DhosDhate-based fertilizerfactory, but it is still in preparation and a more detailed evaluation isnot yet possible. Thirdly, in December 1973 the Government sif'npd contrnPt-tfor the construction of an oil refinery with an annual capacity of about 1.0million tons of crude (annroximatelv 0.9 million tons of refinerrv nroduits)to become operative by 1977. The refinery will be constructed by Britishfirms and managed diirinc the first 10 vears hv 2 US company= Tts oitniut-- except initially minor domestic sales -- will be sold by a German firmon the CGrman markpt Private Briti.cd-i banksq wi11 nrnuirlp finanring nmountingto approximately $25 million. Total investment costs including infrastructureare estimated at about $36 million. PTosiblp sotirces of cruide nil sipply arpNigeria, Libya, and Algeria. Lack of data such as input and output pricesdo not permit an evaluation of the nronierts eronomic Justificatin._
4A3 Trancnnrt
52. Trnspor invesmentshave rmaine at ahigh lve and accoun_efor about 40% of total public investment during 1966-70. Large outlays arebeing planned for the extension of the LTme deep water port with -- , rn - n-d-
FED financing, and for the paving of the main north-south axis that linksTogo and Upper Volta with fundi-ng fro TIDA, FED), .an PAC. According to
present planning, the 680 km highway running from Lome to the Voltaic borderwill be Ifully paved 4n the second part -f thl4s decade and oTme and Owill then be connected by a paved highway. Further road investments are
being ~ _F_ plne ooe p ne-w areas for agricultural dvlp.etadt r,rvcommunications in the interior of the country. Since road transport accountsLi OLiJt C U. * tV0 Vi 1 U Et j C. L L.. LA. at i. ti. LL. Ut)V V CL ILLILCLL < L at d LC LXLIc fit EU ,s L LU ;Y LU
the extension and upgrading of the highway system.
53. The financial position of the Togolese Railway (CFT) is deteriorat-ins and3 ICua oprain dfcits hvreur .overrct,ent subsidiesar,ut£LLL- Ii CLILLUIUdL UJJULCtL.UL[ Ut-I.LLL lve £ CLULIUL ~U %, J1 UI~i UJ LUJ.t:! dILLUUILL
ing to CFAF 100 million each in the 1973 and 1974 budgets. The GovernmenthasL LorIU,ILA.iiLo ned aLu LuUy to aaliye rod vrsus r ai L Ctway tLranp LLSort[. Thib
analysis has not yet been completed. The implementation of the CIMAO projectis likely to require a partial rehabilitation and texpanbsi of the railway
system.
4.4 Education 1/
54. The Government has made substantial efforts to expand the educationsystem. Wnile the adult literacy rate is estimated to be still 10%, primaryschool enrollment increased from 36%o irn 1965 to about 56% in 1972. TheUniversity of Lome was inaugurated in 1972. French and German aid is beingsought for a large expansion of the University. Education expenditures haveincreasingly been absorbing.budgetary resources. They now account for nearly25% of current expenditures despite sizeable parental (and community) con-tributions which are a unique feature of Togo's education system. Since
1/ For more details, see Appendix I, pfELtlIN?ARY hEVALUATIOM OF THE EDTJCATIONSECTOR.
- 29 -
education has been a dynamic expenditure factor and recurrent cost of educa-tional investment may be high, the Government might wislh to give particularconsideration to the financial implications of reform plans. In addition togetting adequate financing, the education system should be better tailoredto the needs of the labor market. Because everyone with at least a primaryschool certificate tries to enter the wage labor market, urban unemploymentis considerable. This in turn has probably contributed to the high levelof Government recruitment. The Goverrnent has set up five reform cormissionsto study the problems and work out basic reform proposals.
55. In view of the ongoing internal discussions it is not yet possibleto evaluate the reform program under consideration. The following tentativeobservations, however, may serve as a starting point for a dialogue withTogolese autlhorities: If the present system continues to develop basicallyas it has, its elitist character is likely to be preserved. Meanwhile, themajority of students would continue to receive a sub-standard primaryeducation of little use in the rural environment or in gaining access tourban wage employment. Education expenditures would tend to absorb growingproportions of the budget. It seems on the other hand that if the Governmentintends to achieve its stated objectives of adapting its education systemto economic. social, and cultural realities, the following points deservefurther consideration:
(i) There might be merit in designing a structural reform.Traditiona1 and modern eetments could be combined into asystem limiting the time between leaving school and enteringthe lahnr fnrCe which iusul1v ocrurs at age 13-1= Ex-perimentation with this concept is already starting inother Western Afrnifric countrles, e .i with emm.i t-ty xin
education initially in the national languages, involvingaduil ts of ther conm.m;nity, andr reinfov-,rce ai t!1- educational
radio broadcasts. The majority of school leavers wouldremain in tile traditionnal- sctor, -n whi lo a Tminor-ityv would0be selected for further study according to modern sector needs.Possihle uanritonns nn tt-ii qtrricture are discussed in
more detail in Appendix I.
(ii) The Government may wish to consider that an improvementin teacher qualifications under presant conditions -- anaverage of 60 students per class -- will necessarilyincrease cOStS, but hardly learn4ng. TnetQA -- m 4t- 4 -a
should be encouraged to further recruit on a contractual basis"mor.itur sA- de v1- whose teacning qu-a'lfi.at4 ons could bIe
improved through short teacher training. A reinforcementof eAucatlonal andA am,m nistrative superv-ion and an adu..atesupply of teaching materials would improve overall teachingeff icency;
- 30 -
(iii) A precondition for the use of national languages in educationis applied researcn in sucn fields as linguistics, ethnology,and oral traditions, and the transformation of this researchinto educational materials;
(iv) investments in education should be increasingjy related todevelopment activities to minimize the risk of students'aspirations created by broadened educational opportunitiesbeing frustrated by the lack of corresponding environmentalchange. Moreover, the school year should be synchronizedwith the regional agricultural cycle;
(v) Decisions on any reform proposals should be made onlyafter priorities and financial implications (capital andrecurrent costs) have been evaluated.
(vi) Timing may be one of the most critical elements, particularlyfor the development and production of educational materials,for teacher (re)training, and for preparing the partiesinvolved to understand and accept the reforms.
4.5 Tourism
56. Development of tourism in and around Lome, and to a minor degreein the interior of the country, is being financed by large amounts of publicfunds. The Tropicana tourist complex on the "Togolese Riviera" east of Lomewas completed in December 1972. It consists of 200 bungalows with 400 bedsand other tourist facilities and provides jobs for about 200 people. Mostof the financing of the CFAF 800 million investment cost was secured fromOPAT which holds 83%/o of the capital of "Societe Touristique du Togo," theowner of Tropicana. 1.3% of the share capital was subscribed by a Germantourist company which also provided technical assistance. A 250-bed deluxehotel in Lome was opened in fall 1974. Further hotel and other touristdevelopments are being studied by Togolese authorities and foreign promoters.The results of a comprehensive LJNDP-financed study on the tourism sector andits prospects should help review sector policies, including investment priori-ties and appropriate financinR schemes.
- 31 -
V. DEVELOPMENT PROSPECTS
5.1 Overall Prospects 1974-85
57. In the absence of the next Five Year Development Plan (1976-80)anti in vitw nf the laerk nf rel- ant diata nn likelv mqinr strucm'ttiral rhanges
of the economy, the following mission projections are necessarily of anl1ittztrAtI1'Y naturie. An attermnt ha hbeen mndAA ton In.-mnAto in the pro -
jections major effects of the implementation of the CIMAO project and theoil refinery 4t nthe scond half of the dadeAo, as well as thp rTMR rnmpnasA-
tion payments to foreign ex-shareholders. Because of the hypothetical natureof a large n m-ber of assumptions at this stage, as well as -- the ords of mmag-nitude involved for crucial projection parameters, and the structural changesto bDe exected, a particular word of caution is ..eesssar; re g arding tbeinterpretation of the highly tentative estimates. 1/
5.2 Tentative Balance of Payments Projections - 1974-85
58. The trend of deteriorating terms of trade reversed slightly in 1973(Table 12), but i8 expected to s-ow- ar, ur,preceente' irv o ore -.han100% in 1974/75 mainly because of tripling of phosphate prices. A high exportprice level is likely to be maintained in subsequent years wLtih a mouest irr-crease towards the end of the decade. In expectation of continuing highworldwide inflation rates, 'nowever, export prices in reai terms are bound todecrease. 2/ The terms of trade will start to deteriorate in the second halfof this decade by about 4% per year primarily as a result of rising importprices. Still, by the end of the seventies the terms of trade are projectedto be about 50% higher than the 1966-70 level. However, a further deteriora-tion is likely to occur in the first half of the 1980s.
59. Chiefly as a result of improved terms of trade, the balance of pay-ments will become more favorabie in the next few years (Table 13). Phosphateproduction and exports will expand while agricultural exports, particularlycocoa and coffee, will increase only moderately in the seventies since rehabili-tation and expansion programs will not come into full operation until theeighties. Unrecorded border trade, which used to tluctuate substantially,introduces an additional element of uncertainty into the foreign trade pro-jections. In the second half of the decade exports of refinery products andclinker are likely to begin which would permit a continuing high export growthrate.
I/ (TMA' 4iinmi*mavi4- alnieia mnnty curirezntly Aonimt for moreh thnn 25% of CMP
150% of gross domestic investment, and 200% of budgetary expenditures.
2/ Bank commodity forecasts assume an increase of international (import)prices of 14% in 1974, 10.9% in 1975, 7.45% in 1976-80, and 6% in 1981-85.Our tentative projections are in current prices which assume an average4% domestic annual price increase (except for exports and imports).
Table 12: flustrative Nission Projectionr: T'erlms of Trade, 1974415
Indices ___ Average A,nnua]L Exiansion Rates ()iU 19'70 1972 1]973 1977F 19 9 196670 0 70-N7N2 7 70-75 80 8b
1'Z,- C-0- o-t- o't- O't- o V VT- 9- 0 0i1e- 0'9- t n- 60 .nl.q EL
a! L, 5; a'6 9'6t ltZ l'b I '6 l '( 9 t E'61 1' 1'9 S'Z1 /.EE 16 9 V l c C a l lsi VOw lZI *lOI Z
vlot - Z' It£t SI'St 1'02 9'tZ O'9 tZZ C't O 91 5J S- tVU- 9'I uil Ce I' ll/ C'LI rCI iI 61 11 niodl *1
Wj5 -oflu 5f6l TiT T S Ct-oM! 0161 ZRI 10-96jt 3 oU6±1 7Z7Wi ?m f tt61 T 0r I T-9t J-a IIt
cmnO. *h iods;N B -~------tln q,AOJEI TT9,iSOxw AO - -------- -~--;10Sn¶n -
5°-:' '61 swaUn.lWJf@UlwoiiThZnaofoa UI'S 34l .AIiA,sr.flSIIYlT an
- 34 -
60. Imports, however, will rise significantly particularly for theconstruction. an-d operation of the OTIArO plant and the 04il refinery, inluinrelated infrastructure, thus reducing considerably the balance of tradeeffect of th.. Lese .wo projects. O .L.Lj.FLJS- , WhLLL..Ll acLcUULnteU LJo UoL.ly abutL
5% of merchandize imports in 1972/73, will rise to about 13% in 1974/75.ThLe effects of increases in export priLces , r,otably phosphate andI coUcoa, w.ll.l
outweigh by far the direct impact of the higher oil bill.
61. The trade balance, which became increasingly negative over the lastfew years, will improve but will nevertheless remain slightly negative.Combined with the traditional service account deficit, the current accountbalance will continue to be negative. However, two aspects represent adeparture from recent balance of payment developments. First, the currentaccount deficit will become comparatively smaller (for instance, in propor-tion to GDP, exports, and imports). Secondly, and more important, the gapwill not be financed with a drawdown of reserves but with increasing foreigncapital inflows, particularly in connection with the CIMAO and the oil refin-ery projects. In the projections we have assumed an increase of foreign re-serves for the second half of the decade because reserves are currently lowand rapidly rising imports necessitate a build up or additionai runds tomaintain an adequate reserve level in proportion to imports.
5.3 Tentative GDP Projections - 1974-85
62. GDP growth is expected to accelerate in 1974/75 essentially dueto rapidly rising phosphate sales (Table 14). During 1970-75, nominal GDPgrowth is likely to rise at about 12% on average per year as against an aver-age annual rate of 8% for the 1970-73 period alone. In anticipation of fur-ther Government efforts in the rural sector, we assumed some agriculturalproduction increases in later years. With a high import content of the oilrefinery output, the GDP growth component (value added) of this projectwill be rather limited. GDP expansion in the second half of the decadeis projected to be around 8% per year and probably in the neighborhood of7% during the early eighties, or about 4% in real terms. As noted earlier,the terms of trade are likely to deteriorate in the future which will tendto restrict economic growth.
63. Outlays for investment are likely to rise substantially during therest of the decade especially in view of the CIMIAO and oil refinery projectsand as a result of increased efforts for project identification and pre-paration (Table 15). The proportion of investment to GDP is projected torise to around 19% per year during the second half of the decade as against13.4% during 1966-70. National savings are tentatively estimated to increasesignificantly after the rapid decrease during recent years; projectionssuggest a national savings rate of approximately 10-11% of GDP.
64. In line with the expected economic recovery, the outlook for publicfinance is more favorable than it has been in the past few years. In anti-cipation of the export growth and economic upswing, the Government has alreadytaken measures to increase public revenues in the original 1974 budget byCFAF 3 billion or 21.6% more than the 1973 budget, mainly by introducing anexport surtax on nhosnhate. cocoa. and coffee. and by increasing revenuesfrom Government enterprises. Current expenditures, however, will continue toexpand, partly due to a eeneral 10% salary increase since January 1974 aswell as rising public debt service. On balance, however, budgetary savingsare likely to grnw again- and the rovernment budgeted higher canital apnro-priations for 1974. OPAT trading surpluses are also expected to increasenomewhat in uipw of favnrahle market ronditions for eo-nca and e-offppe eventhough higher producer prices and export taxes will tend to limit profitgrowth.
6S Thme mission has attemnted to give a rough notline of a tentatvupfinancing pattern for public investment in the second half of this decade.Table 16 AincluAda a coa4ae wi4th t-he r-eAsults rof the firet- pl9. Tho
availability of foreign funds will continue to determine largely the levelof public investm.ent. The-se Mo parameters are highly correlated and an.y
upward adjustment of the public investment level would only be possible ifaAequate external funding coulA be secured. T-:gl- onI, the 4 basi ofexpetedAIt.t AaC~~ U LO. .5 UAIA_S - 6-.t C~ A L. JS
5J -IS tA
higher revenues from the Government's total capital participation in CTMBar,d m,ore favorable econom"ic conr,ditions, b_uAgetary recelpts are estim,ated t-oreach a level of nearly 20% of GDP during the second half of the seventiesas aga4in 1 1! !'I.' duLrin 7 U_ anA I .Y I_ _t .51 rcent 7Ca. 1
CkiA C~~~~~~llvv I oU 1 D {V " L& a J- I -. z o *z CLs-Lz-Z%-
6.4 A- indicated earlier, the growtho urn xedtr awiv M~tD .L ALU L. LU ai "II LJ LIIII .L AL U7L 1L.5L LICLO
accelerated and accounted for a growing proportion of GDP, i.e. around 12,i.n thle past few years as against L% JLurng 1967U0IV. TL kteeJJ experLU.dLures
within manageable limits, the Government should devote increasing attentionto LtIle UyrlamidU± 0 LII.L -'grOwthl. 'lo achiLeve -a gre ater lexciLbilitLy LLin puUbJlic
finance, the factors of recent expenditure growth should be reviewed andinvestr,.ent prOJAeCts scrut 4 i.-zedG w-l.th a- -vw to4 - i-tn -h e^ansio4(n o-f.&LV~0LII~II ~JLLP ~LLOOLLUL.LLL£.~ WJ. CZ VA.LW LV L.LJ.iIJ L.LLLn LLI= ~A^0IC.LLLOrecurrent cost. For this reason, a closer cooperation in investments anduuudget pLannrLing between the M'Lnistries of P.LaLnLL.LLLg adIU .ar.ce/Econo
will be necessary. Current expenditure for priority development tasks suchas rura'l U'evelopment, certaiLn types ofL eduucatiLon andu IheaLtl servJJLces, aswell as increased maintenance and other recurrent costs will probablyrequre 'Larger appropriLatiLons. 'L&lereforCe, We LVt Lhae ItaIL.LVeLy a an
increased current expenditure level of around 14% of GDP.
1/ For the purpose of this projection, compensation payments and repaymentsof private bank loans for a previous increase of the Government's capitalparticipation are assumed to be financed from additionai CTMB profitsaccruing to the Government in 1974 and 1975.
ti. Public Investment(5+6+7) 214.14 107 4)28 1.00 lOC) 7.8 1.2.6
/l Rate of exchange: 1$ CFAF 250
12 Increase -
- 39 -
67. Budgetary savings would, therefore, amount to about 5.7% of GDP.Together with other public savings, they would lead to total public savingsof approximately 7% of GDP as against 3.5% during 1966-70. Debt servicepayments, which were at the low level of 0.6 % of GDP during 1966-70, will riserapidly and are estimated to reach about 2.1% of GDP in the second half ofthe decade. Despite higher export earnings, the debt service ratio for the1976-80 period will probably be of the order of 5% as against 2.3% during1966-70. Nlet public savings are likely to reach 4.7% of GDP as against2.9% during 1966-70. We have furthermore assumed that the Government willbuild up reserves of about CFAF 10 billion during the 1976-80 period giventhe sizeable import growth. This appears to be a conservative estimatesince by 1980 about CFAF 23 billion represents the equivalent of three monthsof merchandise import requirements.
5.5 External Aid and Creditworthiness
68. Assutming an inrreased absorntiup ranacity nf the ronintrv in arepryears, and the implementation of the CIMAO and oil refinery projects, we havetentatively projected a high level of pnhlir inuvetment financed principallythrough a larger inflow of external funds. In the past, France, Germany, andFED have been the nio-r suppliers of foreign aid and they will probably con-tinue to provide relatively large amounts for public investment. Moreover,Togo has recently tried to diversify its external resources, for instancethrough fundings from Canada, U.K., IDA, ADB, and commitments from Chinawhich in the future should help achieve an increased and assured level offoreign financing.
69. The projections are largely based on a continuation of foreign aidpolicyie,ia e,xten s ion of large proportions of grant-s and loans at conrces-sionary terms, except for the two large directly productive industrial pro-J eU . Thi.s i, o--; reasov,n WhIJ th de t v 4ce rat a o 1 , even 1*f-oug,- exp ecLt
to double in relation to the 1966-70 level, is likely to remain at a compara-tivelly low Ieve' of abu 7 do he average during the secn, halofthI .L7 .L%JW .L=V%-J. WtJ1. UL aLJA l .J/ Jf UaV ~i. U'AA. *klb LLLL second 'Al lLa.lf . L L1U=
decade. Having tentatively assumed, inter alia, full interest capitalizationdunrlng the construcer ior.ardsA, nmnjor repa,ments of principal. for CIMAOand partly for the oil refinery will become due during the eighties. RoughetiAte4@A 1 §s sugs tha duin the carl eg1-- .. A 1- sen-ric ee rAdmeoCO *.. *---a iC GO U6E,V: v. istaL LLtL *CL56 W& CA- *y 0S
61U a , LsfKlC PCU .. C OWL V L.CC A. a LAP ...
rise to an average level of approximately 10%. The tentative findings ofth,e illustrative proJections can of course _L- on.y ULPJroad orAers ofmagnitude. They will be reviewed and updated as soon as more releventAetails are available.uC LQ.. LC Va.L aU
70. Ir, summ"ary, 't aprsthat the- growth -rset ------ --orsanI LA* LI C44IU~L , 1.L ak ~jiSCdi& C niL L LW- iL1 FL U01JV CP..L ALJI =4J% .I LC, c%LIU
the economy as a whole are generally good, and external public debt appearsto Le wit.hLLLIIln m1ar1ageabtLe 'level. In vi.e w of thLe country's poverty andU
reasonably good performance, foreign aid agencies should continue to pro-vide dUeveloprment a'u on pre'Uouui'Lnant'Ly concessiLonary terlls andU ue preparedto finance a large proportion of project costs. Given the small size of theeconomy and the current uncer-ainty about essential conditions of --I e
- 40 -
large undertakings and about external trade(including unrecorded border
trade),an increase in public debt on conventional terms appears presentlyonly justified in particular cases for directly productive investments with
adequate self-financing arrangements for additional debt servicing.
\. .E *&* A. v IU 6 %*. tw v J* C) C i _v .L C i_ v …
of six years of primary education starting at about age 6 followed by a fouryear lower secondary school, a t-hree year upper seconAda oshool and higherstudies of varying duration. The language of instruction is French. Besides
LeMir.istry of EduCatiOn W, whc u-.ebsi colsse. M4inistries ofRural Economy, Health, Labor, and Public Works operate specialized institu-t.A.- OtherA Wa.L" UbU.es ucluAd.e t1h,e rs"Unist-yr ofl. the N'tatio-^L In.sti=O
tute for Scientific Research, and the private school networks. Non-formaleduucat-i'on is -dJspersedu aor.g th-e I'Un-istries of R-ural Ecor.omey (OJeunesse Pior.=-L6niere and Maisons Rurales Familiales, agricultural extension services,
'A-t'on ---. a o c Affaires (l] t …c o r at'ior,1%11IJZO.LU ULT.JJ J. I- aE. ±La142L.LJ1F UL .LUJ.LU1LL
(radio programs); of Health (hygiene, health); and also the National Youth' ovement. In addition are the generally ignored areas; informal education(traditional apprenticeship with local artisans) and the African-family andcomunity oral education -- the only system which the majority of the ruralpopulation has known.
(ii) Formal education prepares individuals for wage employment; tradition-a! apprenticeship trains them for independent professions; and African commun-ity education prepares them for village subsistence agriculture. These areparallel systems. Non-formal education, which operates on a modest scale,consists of several efforts to make the education of both those exposed toformal education or bypassed by it more relevant to the present economic andsocial environment.
(iii) Economic and social conditions in the rural areas are usually notfavorable 2/ and the hope for change is limited. Therefore young people havelittle choice but to move out of their traditional milieu. A privilegedmeans is through access to formal education, which at the primary levelexperienced rapid growth of about 8.5% per year during 1967/68-1972/73.
(iv) Parents make considerable financial contributions to the system.Their contributions are one of the most original features of education inTogo. Monetary contributions were estimated at CFAF 226 million in 1973 forboth public and private education (including CFAF 143 tillion capital expendi-tures) against a total expenditure of CFAF 3.3 billion 3/. Private expendi-tures, however, may be at least twice these amounts if payments in kind areincluded such as food for teachers and labor for school construction. With-out them it is unlikely that the primary school enrollment ratio could haveincreased from an estimated 36% of the school age population (5-14) in 1964/65,to 41% in 1968/69, and 56% in 1972/73. Parents have thus been able to recruit
1/ This appendix was prepared by Mr. Francis Lethem.
3/ 1972/73 - Statistics of the Ministry of Education, p. 4.
Appendix IPage 2
on a contractual basis, and at a cost of between CFAF 2,000-4,000 (against aminimum CFAF 9,000 when appointed by Government), primary school and lowersecondary school (BEPC) graduates as primary school teachers, so called"moniteurs de village". Their numbers increased at an annual average rate of16% from 200 in 1964/65 to 700 in 1972/73 including about 100 BEPC holders.This increase of the teaching staff is an illustration of the difficulty formalschool graduates have in obtaining wage employment, and their realism regardingthe choice between returning to the non-wage sector or accepting a salary belowthe minimum guaranteed monthly wage of about CFA 6,800 in 1973.
(v) In 1970 wage employment equalled 33,000 out of a population of2 million which included 900,000 potentially active persons. The 1970 levelof wage earners compares with about 16,000 in 1960 and 22,000 in 1965 -- anaverage growth rate of about 8% or about 2,000 new jobs per year. Assuminga similar growth rate for the future, and a replacement rate of 2%, the annualabsorption capacity of wage employment may be about 4,000 in 1973. Againstthis figure, there may have been at least 6,000 and up to 25,000 additionalyoung people trying to get wage employment in 1973:
Boys Girls Total
Grade 6 students not enteringsecondary education 15.400 5,700 21,100
Grade 10 students failing atBEPC examination /1 1,200 450 1,650
labor market creates a great deal of pressure to expand the next higherlevels of formaal education, since the better-educated have easier access to
wage employment, and foregone monetary earnings are probably minimal.At- the m& 4,e ----- at rates zre considAerable 4n ---ades from. which student6XA~ ".&~ OCAa& _ 6L.ILM~A .A L"6~O QA. '~J* - V ~ .A. 6k ££.JL WILL~..LL L.U UL
transfer to a higher cycle: 48% of total grade 6 enrollment in 1972/73againstL L 4J/, L I I I/ I a dLIU L //o a6d.LL L n7o UX*U LA &.L UU I VLL U±I/L L
the same years. In other words, the formal education system's main products(at 'Least in quantitati-ve LCLLI,) aUL UL"rUUL,t , LrpLeate,a..d, foL LIlUth
who do not go beyond grade 4 (about 15,000 in 1969/70), 1/ illiterates. Theoutcome oUL tLhe formual education system is Uest illuLstrZat e n -the -u-NIL-F
report 2/ "Enfants et jeunesse dans l'espace torgolais" (Vol* 2), Denember 1971,whlich shows in particular the importance of mivration after completion ofgrade 6.
1/ Les Causes des Deperditions des effectifs scolaires au Togo, Ministere del'Education, Lome, 1972.
2/ Pages 84-92.
APPENDIX I
(vii) Public expenditures on education are large despite parental anidcommunity contributions. Current expenditures were estimated at CFAF 2.6billion in the 1972 budget against 2 billion in 1971 or a .30% increase. 1/They represented about 19.5% of public current revenues. Adding contributionsby local authorities and by parents for capital expenditures, total nationaleducation expenditure was about CFAF-3 billion or 3.5% of GDP. Foreign aidwas estimated at CFAF 0.8 billion. Between 1966 and 1970, for which actualexpenditure figures are available, total public expenditures on education incurrent terms grew from about CFAF 1.1 billion to CFAF 1.7 billion or at anannual average rate of about 13%. Estimated 1973 unit costs in publicschools, 2/ especially at the primary level, appear to be low compared toneighboring countries.
UpperTogo Dahomey Mali Volta Ghana(1973) (1970) (1971) (1972) (1970)
The low public unit costs in primary and lower secondary education relativeto other couintries arp essentinlv due to the large nuhmber of sttudents npr
classroom (respectively 60:1 and 56:1). However, they only hide the factthat average annual teacher salares (e.g. about CFAF 355,000 in primaryeducation or 8.5 times GNP per capita) are, as in neighbouring countries,too high relat4vre to the leirvl of eononmic devenlopment if eatonn isc onin
to reach all school age children within a reasonable period of time.
2. Basic Issues
(viii) The need for fundamental change. It seems that since as early asOdO S1 / an A_ certanly ea',r. tha manny Fr--- cnphon -a4nkr o^- TA-n 1-.r falt
Xi . v J1 , L X 1J_ S. L - .L oneai- . nLthJ qgA I_VitVL_ J__A ,1 I1-
the need to adapt its education system to the nation's economic realities:".... to train people most of whom will hav tro rtma-n4 -wrkL and l4ve with-
in their environment .... namely the rural areas. But if education is to bereformned, sC) W-411 have agriculture." a ,The exaso o-4- prmay -nolmen-ts, t-he
lack of relevancy of primary education to the needs of those who will notUdy furtLler, its 'low efl_.ciency, the over supply of BP holders in termt.s of
1/ Essai de Budgetisation de Depenses de l'Education, Ministere de l'Educa-tion, 1972.
2/ In CFAF. Foreign aid included at local cost equivalent.3/ "Livre Vert" (Party Platform), Lome, 1969, pages 16-17; 28-30; 33-34; 36.
Appendix T
Page 4
the country's absorptlon cat- and tiL. Ca A. a O poLnLV%= Us[IV CLe unv ,ty
structure were all identified as key issues to be solved. Therefore "soc:ialJustice anA equalizat[on of opportunity imtust beco,e -lie rule, .... an' enroll-
ment ratios must increase, regional and sex inequalities must be corrected.To thfat enAd buetter qua'4lfied4 teacliers mIust b'e recruite' an' tile natiortal
languages must be used to preserve and develop the country's cultural_denty"..LU[L-LLLY
(x) 'Pi-e inertia ofl th-e edu`ation -syste;r-,. Little progresshabenl,d\ A 1 IL [[L L. .U L L LC C.ULCU.LVLUL[~~I. "LJ. L.LLCU ~ ~ LIi-I,UtUll [i[UtU
toward the nation's educational objectives. Exceptions to this, however, areL[ti[ t LdlislhieCIIL Ut d UnlVer sit Ly canu espeCLLiadlly i Ls IntbiL.LLULt Of 'JdIadgeIiienlt ,
thie imaginative reform of agricultural education in 1973 -- both largely out-side the influence oU tL[e T "i-isy _f Education -- as well as the creation ofa Teacher Training College at Atakpame. The following data on primary educationare particularly significant. Th'e reforins expected to occur during the first
plan did not take place. 1/ Although enrollment ratios increased, regionaldisparities rem-sainedl. 1The ratiL 01 Ltlh J-Marit1Lilt region1 slghtly decreased
from 1.22 to 1.18 times the national average; that of the Savanna Region re-mained at 0.45 times the national average. The ratio of girls to boys in-creased from 0.42 in 1965/66 to 0.47 in 1972/73 although again, regional dis-parities have remained wiue (0.2u6 in Dapango; 0.43 in the Sokode/Atakpainiearea; 0.78 in Lome all in 1972/73). The average number of pupils per class-room increased from 56 in 1964/65 to 69 in 1972i73. Teaciher qualificationsincreased, but it is uncertain whether under the present teaching conditions(both classroom overcrowding and lack of teaching materials) major improve-ments can be expected in teaching effectiveness.
Develonment of Teaching Staff of Public Sector. 1964/65 - 72/73
as a nereent of total teaching staff1964/65 1972/73
1/ Ministere de l'Education; 2e Plan Quinquennal 1971-1975; DocumentAnnexe, Section Enseignement.
Appendix IPage 5
3. Education Reform
(x) The Government, conscious of the difficulties, has set up fivereform committees through the Higher National Education Council, whose con-clusions are being submitted to the authorities. It is understood that theobjectives of the reform are to be of a long term nature -- which representsan appropriate time horizon. We have attempted to make a preliminary reviewof the alternatives open to the Government.
(xi) One possibility is to let the system grow on its own, while ensuringthat present unit costs are maintained so that recurrent education expendituresmight reach an estimated 24% of public current revenues by 1985. By then, themajority of the population could be provided with the appearance of a primaryeducation (corresponding to parents' present presumed demand for formal educationas an escape for their children from the rural environment). Secondary edu-cation would have grown at an average 10% per year against 15% in the pastdecade. The elitist character of the system, however, would still be preservedthrough the continued existence of a private school network of better academicquality than in the public sector, and which would lead to highly selectiveupper secondary/lycee university education. The long-term financial feasibilityof this alternative represents a maior difference between Togo and many of itsneighbors in West Africa where unit costs are relatively higher compared tonational resources (nara. vii).
(xii) Togo; however- may wish to do more to fulfill its stated obiertives(para. viii). It may want to counteract the buildup of social and politicalpressure that is bound to develop whlen masses of young people cannot findwage employment. 1/ If this is the case, it seems that educational planningand reform could henefit from adoption of some of the following prinrinles:
(a) Strurture: traditional and modern elements should he- combinedinto a system limiting the gap between schooling and entranceinto the lahor force. That noint would he ahout ace 1_-15_after which a major cutoff should take place: the majoritywould remain in the traditional sectors (agriculture, artisaqntrade), a minority would be selected in relation to wage(modern) qettnr need Poqeile l t1eprnatvee -include !
A. 1? a community-tyne education given in t-he national languagesinvolving adults of the community trained e.g. in animation,function.al literacy, and agricul ture exte~nsion techniques,
and reinforced with educational radio broadcasts. Thiscould be up to age 8-9;
1/ See para. 5. By 1985, the annual absorptive capacity in wage employmentmay optimistically reach about 9,000 against which there would be everyyear at least 15,000 and up to 60,000 new candidates.
Appendix IPage 6
2. an accelerated primary education (3-4 grades) wlhere thechild is progressively introduced to Frenchi while con-tinuing his agricultural/craft instruction;
3. a third stage of education with a variety of practicalshort specializations whMch, for pupils needed for wageemployment or able to become self-employed, might leadto:
4. a higher education based on a modular concept with alter-nating practice and theory.
B. A combination of A(1) and (2) which could be designated ascorresponding to the new concept of basic education, to be givenby a combination of specially trained or retrained teachers,assisting village leaders. This could then be followed byA(3) and (4) above.
C. The present 6-grade primary curriculum to start about age 7,with teaching in national languages in the early arades anduse of local cultural materials. This would be followed byproposals A (3) and (4). In all cases promotion would beautomatic up to the cutoff point (about age 13-15).
(b) Teacher qualifications: an improvement in teacher qualificationsunder the present teaching conditions (classes of 60 students onthe average) will necessarily increase costs, but wqill hardlyimprove learning. Instead communities should be encouraged tofurther recruit "moniteurs de village" in the medium term period.An increasing proportion of them have REPC oualifirationsand require only short teacher training to reach the formaluualifications of instituteurs - adioints. A reinforcement ofeducational and administrative supervision, for instance, byinsnectors and educational advisors might be more effective.especially if accompanied by supply of teaching materials.
(c) Development of educational materials: research (linguistics,ethnolv-og nro1 traditions) and its rransformatinn into
educational materials adapted to learning progressions isa pre-cndition to the iiu of national lannagesa for 9dhantionnlpurposes.
(d) Relation to economic developmer.t: educational investmentsshould preferably be related to rural or urban development actionsto minimize t}ie risks that the aspirations of broadened educational
p. p t u n L A .4 e W Ul-A. le .1 r.1 s A. at. b yI th . . A 1 -I C V A.A .; ------ tAJF
AunPt'DW"V IALL Lc FL4qwLjL L
Page 7
changes. The school year should be synchronized with the regionalagricultural cycle, so that children in rural areas do not have toattend school during periods of peak labor demand.
(e) Finance: Decisions on reform proposals should await specificationof related capital and recurrent costs.
(f) Phasine: Timing may be a critical element in reform programming.particularly for development and production of educationalmaterials, teacher training or retrainine. and nreDarationof the parents and teaching profession to understand and acceptrefnrms.
STATISTICAL APPEfNDDCX
1. Population1.1 Population 1972
2. National Accounts / Development Plans2.1 GDP at Current Mrket Prices2.2 Investment Financing, 1966 - 712.3 Sectorial Composition of Investments, 1966 - 70
3. Balance of Payments3.IBalance -of Payments, 1966 - 723.2 Balance of Payments (Net Basis), 1966 - 733.3 Composition of Recorded Exports, 1966 - 733.4 Composition of Recorded Imports, 1966 - 733.5 Direction of Exports, 1966 - 733.6 Direction of Imports, 1966 - 733.7 Recorded Imports of Selected Foodstuff, 1966 - 73
4. External Debt / Foreign Aid
4.1 External Public Debt Outstanding as of December 31, 19724.2 External Public Debt as of December 31, 19724.3 Disbursements of Foreign Offical-Grants & Loans, 1966 - 73
5. Public Finance
5.1 Government Revenue-Accrual Basis, 1966 - 735.2 Government Expenditure-Accrual Basis, 1966 - 735.3 Receipts & Expenditures of Local Authorities, 1966 - 725.h Treasury Position. 1966 - 73
6. Monetarv Statistics6.1 Monetary Survey, 1966 - 736.2 Foreign Assets and Liabilities of the Banking Svstem6.3 Togolese Development Bank: Credits Granted, 1968 - 726.h Interest Rates Applied by the Central Bank6.5 Structure of Interest Rates Applied by Commercial Banks6.6 CNCA - Balance Sheet, 1967/68 - 71/726.7 National Savings Bank (CNE): Deposits
7. Agricultural Sector7.1 Producer's Price of Main Cash Crops. 1965/66 - 73/7h7.2 Price Structure of Cocoa and Coffee, 1966/67 - 73/747.3 OPAT Balance Sheet, 1966 - 727.A OPAT Profits and Losses by Product, 1965/66 - 73/747.5 Marketed Produntion of Cash Cropns 1966/67 - 72/71
8. Other Sectors
8.1 Electric Power Production, 1966 - 738.2 CTMB - Sales, Costs, and Profits, 1968 - 728.3 Tmports of Petroleum Productsj 1966 - 72
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W~~~~~~~ P1. Pt X tX s 4 _ C * 1 ~~~~ MMM. M~~~~~~~~~~~~~~~~~~ZC 0 nM !l 1 -4
_ ___.0 A. ? nun Z O N O. a aO dUIW~Wb~0bO O gO a .O .U aboA ._ a co I O a to r
se~00~Dm--40J.C 4 a z se. e_ te
le0f~~~0 Z P1. oE
_- __- _* _ - - - 1_ - UZ o C O .Pt*4
C) CD UN D. e we bo br JN" J D*s J<|ooun--_-o - euqa am o - w - <>oo> - .w _s._
.- _crocoo o__ >sozoo o -** * c.Z o
J* 'tS le
i p low m .S 41, n UD C: w D P * * 0D
1,0 .. M o op O4- kmn to ID I< b@$- $| D O..i r"44 M- 0 l-
Source: Data provided by the CEA0, as quoted by the IMFIn addition to the discount rate, the BCEAO charges a commission of 1 per centper annum on the amount of rediscount exceeding 75 per cent of the ceiling.
2J Before January 29, 1973, it was only limited to the ratio of 10 per cent.
Table 6.5 : Structure of Interest Rates Applied by Commercial Banks A:(in per cent per year)
Within individual In excess oflimits individual limits
I. interest rates charged on creditShort-term
To official marketing agencies forcrop financing 6.50 11.00
Credits granted to productive enter-.prises entitled to a founding oran approval agreement or to 6.50 minimumpreferential treatment 7.25 maximum 11.00
Advances on commodities properlyguaranteed 6.50 11.00
Other credits or advances redis- 7.50 minimumcon -table by the Centr.al Ban.- 1m.50 .4 m
Other credits or advances not redis-countable by the Central Bank in an 9.00 minimumamount of less than CFAF 5,000,000 10.00 maximum
Other credits or advances in anamount exceeding CFAF 5,000,000 not 9.00 minimumrediscoutable by the Central Bank 11.00 maximum
Menimm-ter-. /2
Investment credits to enterpriseshaving a founding agreement orcredits for construction of social 7.25 minimum
.nterest 7 75 m-"i..'.
Agricultural, industrial, or comm- 7.25 minimumcial credits of a productive nature b.0O maximum
Gloostru.ction credits not declared ofsocial interest or not meeting thecriteria for housing of socialinterest as defined by the 9.00 minimumGovernment 10.00 maximum
Credits not rediscountable by theBCEAO 11.00
TI. Interest rates paid on deposits
Government or quasi-government Determined bydeposits agreement
Private deposits Up to CFAF 200,000 Above CFAF 5,000,000
Demand deposit _ 3.75 mirimum
me -JJ04i
Less than six months 2.50 5.00 minimumSix months to one year h.00v 6.oo minimumOne year to less than two years 5.00 6.25 minimumTo years a.d over 6.o 6.50 r - rw
Savings accounts 4.75
Source: Data provided by the BCMAO as quote lby the T2I
Ll As of January 29, 19732 In addition to the interest rates indicated, two commissions, of 0.15 per cent
and of 0.25 per cent, are applied to medium-term credits rediscountable by the BCEAO,wit+h, +t exc A+eption ofe credAitA -, +AA -4 +, -. -. 454. -1
than CFAF 4,000,000 for private housing.
Table 6.6 : CNCA - Balance Sheet, 1967/68 - 1971/72(in millions of CFA francs)
Ll Price paid for unbroken beams (caf6 sain) of the Robusta Variety. The producer's price for brokencoffee beans (cafe triage) is CFAF 40.0, and the corresponding f.o.b. cost price around CFAF 90.0.
Source: ;Data provided by the Togolese authorities.
Table 7.3: OPAT, Balance Sheet, 1966-1972(in millions of CFA franca)
* - Bad of September 1966 1967 1968 1969 1970 1971 1972
Note: C.E.E.T. = Compagnie d.Ebergie Electrique du TogoC.T.M.B. - Compagnie Togolaise des Mines du BeninI.T.T. = Industrie Textile Togolaise.
I1 of which purchase from The Commurnaute Electrique du Benin (C,,E.B,) : 9.8 miLlions KWh.Z2 'J.E.E.T. only. C.T.M.B. and I.T.T. generate electric power for their oiwn inidustrial use.
Source: Data provided by the Togolese authorities.
Table 8.2 : CTM B * Sales Costs and Profits, 1968 - 12