Togo

Overview

Togo is a small country in the Gulf of Guinea which became independent from France in 1960.  A strip of land between Ghana and Benin, Togo occupies an area of 56 800.km2, with 56km of coastline, making it a transit country to the hinterland (Niger, Burkina Faso and Chad.).  According to the 2010 census, Togo has a population of 6 191 155 inhabitants, which is growing at 2.8% per year.

Togo is part of the West African Economic and Monetary Union.  The economy is dominated by the primary sector which contributes up to 38% to economic growth, while industrial activities contribute 22%.  In 2011, GDP growth was measured at 3.9%.  This figure reached 5.6% in 2012, thanks to increases in the exports of phosphate (of which Togo is one of the largest exporters in Africa) and cotton, expansion of the public works and construction sector and an upturn in activities at the port of Lomé stemming from a downturn in activities at the port of Cotonou in Benin.  The good economic prospects in Togo over recent years can also be considered as the fruits

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Overview

Togo is a small country in the Gulf of Guinea which became independent from France in 1960.  A strip of land between Ghana and Benin, Togo occupies an area of 56 800.km2, with 56km of coastline, making it a transit country to the hinterland (Niger, Burkina Faso and Chad.).  According to the 2010 census, Togo has a population of 6 191 155 inhabitants, which is growing at 2.8% per year.

Togo is part of the West African Economic and Monetary Union.  The economy is dominated by the primary sector which contributes up to 38% to economic growth, while industrial activities contribute 22%.  In 2011, GDP growth was measured at 3.9%.  This figure reached 5.6% in 2012, thanks to increases in the exports of phosphate (of which Togo is one of the largest exporters in Africa) and cotton, expansion of the public works and construction sector and an upturn in activities at the port of Lomé stemming from a downturn in activities at the port of Cotonou in Benin.  The good economic prospects in Togo over recent years can also be considered as the fruits of several ongoing economic and fiscal reforms in the country since 2008/2009.  GDP growth is expected to reach 4.4% in 2013. The inflation rate was kept at 2.3% in 2012, mostly due to an estimated 4.5% drop in the price of communication services.

Poverty is a major concern in Togo, with six in 10 people living below the poverty line, a figure which reaches nine people in 10 in the northern part of the country. 

Access to finance

Togo is part of the Central Bank of West African States of which there are seven other member states (Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger and Senegal).  Togo’s national financial system is highly concentrated, with one bank owning over one fifth of the total banks assets in the country. In 2012, Togo was recorded as having 12 banks of which most are commercial banks, and one financial intermediary, the Fonds de Garantie des Investissements Privés en Afrique de l’Ouest (GARI).  One third of the banks in Togo are government owned.  In 2012 the banking sector had total assets of CFA Francs 601.8 billion (US$1.2 billion), representing 31% of the nominal GDP.  About 60% of these assets were short-term loans. Togo is also the headquarters of the pan-African bank Ecobank.

As of December 2012, there were 92 registered microfinance institutions in Togo with a total of 846 service points.  These MFIs had 1.9 million clients with total deposits of CFA Francs 121 billion (US$242 million) for total outstanding loans of CFA Francs 108 billion (around $204 million).  The  Faîtière des Unités Coopératives d’Epargne et de Crédit (FUCEC – Togo) is probably the biggest microfinance network in Togo with over 500 000 members and consolidated assets worth about CFA Francs 50 billion (about US$100 million).

Togo has two social security institutions, the Togolese Pension Fund (CRT) for civil servants and the National Social Security Fund (CNSS) for private sector employees and other categories of government personnel.  Recently a National Health Insurance Institute was created, which is a national universal health insurance scheme only open to civil servants at the moment but expected to be extended to the whole population in the future.  As is the case in many African contries, both of the social security institutions are unfunded defined benefit schemes, and face financial difficulties and structural challenges.  Indeed, both institutions have been running deficits for many years and survive through government subsidies.  Strong and substantive reforms are needed to revive these institutions.

Access to credit is limited and most lending from the banking system is short to medium term.  A few banks offer housing finance and mortgage products and services, ranging from loans for land acquisition to loans for housing enhancement to loans for housing purchase of construction.  The Union Togolaise de Banque (UTB) offers all of these products, while the Togolese Bank for Commerce and Industry (Banque Togolaise pour le Commerce et l’Industrie, or BTCI) and the Togolese Savings Bank (Caisse d’Epargne du Togo) have also developed housing finance products.  Conditions of access to these products vary from one bank to the next, but the loan period is usually between four and 10 years.  The interest rate is between 11% and 12%, while guarantees requested by the lending bank range from a mortgage on the purchased land or house to life insurance.  Some banks request a percentage of up to 5% of the loan as a guarantee.  The amount of the loan can be as high as 50% of the annual salary of the borrower.  In general these loans are available to people with regular jobs and revenues from the public and private sector.

Lomé, the capital city of Togo is also the headquarters of the Regional Mortgage Refinancing Fund (the Caisse Régionale de Refinancement Hypothécaire, or CRRH), which is a regional fund created in 2010 to facilitate access to long-term resources needed to provide long-term loans such as housing finance and mortgages.  Several Togolese banks such as EcoBank and Banque Atlantique Togo are shareholders of the Fund. 

Affordability

In Togo the average monthly income is estimated at CFA Francs 35 340 (US$70.48), and is equivalent to an annual average salary of US$842.76.  In Lomé, the price of  a square metre of land varies between CFA Francs 16 500 (US$33) and CFA Francs 33 500 (US$66.81) in the suburbs and between CFA Francs 33 500 and CFA Francs 83 500 (US$167) in downtown Lomé.  The minimum size of a plot is 150m2 for a minimum housing size of 40m2.

While the cement price in Togo is the cheapest of all countries in the WAEMU, it is still far above the purchasing power of most Togolese.  Indeed, a standard 50kg bag of cement costs in Togo between CFA Francs 4 000 (US$8) and CFA Francs 4 150 (US$8.30).  A standard galvanised sheet of iron for roofing costs between CFA Francs 1 850 (US$3.70) and CFA Francs 3 200 (US$6.40). Other construction materials are also out of reach of the poorest of the population.

It will take between 10 and 15 years for a senior manager in the Togolese public administration to pay off the price of land in downtown Lomé.  The cheapest housing unit (40m2) built by a developer costs between CFA Francs 3.8 million (US$7 600) and CFA Francs 4.4 million (US$8 800).  Under these conditions, housing affordability, like in many African countries, is a mere dream for most Togolese, even for many of those with a formal job and a regular income. 

Housing supply

From the 1960s to the 1990s, the government of Togo invested significant effort and resources into the supply of housing.  Several instruments were put in place, including a Special Housing Development Fund, and housing-specific operations were initiated by the Togolese Development Bank (BTD), the Société Immobilière Togolaise (SITO) and the National Social Security Fund (CNSS).  However, in the 40 year period between 1954 and 1994, these institutions produced and placed on the housing market only 1 447 apartments.  These units were sold through a leasing arrangement to employees over a period of 10 to 15 years.  The cost of these units in all cases was such that even high income senior executives were unable to access them.

Today housing supply is a real challenge that households overcome through self-construction.  But self-construction and poor provision of serviced lands, combined with a rural exodus, have contributed to urban sprawl on the northern side of Lomé, which is now mainly made up of slums.  Only richer people can afford to purchase land in Lomé and other secondary cities and build formal houses.  Conscious of challenges in the sector, the government of Togo has actively sought solutions to the problem of the housing shortage, engaging, for example, with Shelter Afrique and private developers to attempt to supply the housing needed in the market.  These potential solutions include a plan to create 1 000 affordable housing units in the north-east of Sanguera, a town 25km to the west of Lomé.  In November 2012, a partnership was signed between the Atlantique Bank Group for the financing of several real estate projects in seven countries in West Africa, including in Togo.  Also, a new real estate project was started in 2011 to provide about 100 houses along the Lomé beach, a few kilometres from the Ghanaian border.

There has been some advertising around a 5 000 housing unit project (the so-called Wellbeing City project) in the suburbs of Lomé, 25 km from the inner city, and purportedly sponsored by a private real estate developer, Confortis Immobilier.  It would be risky to take such a project seriously (it has never been mentioned in any official documents or speeches) but even so, it is insignificant compared to the demand for new housing units. 

Property market

Togo’s formal property market is still developing.  According to the 2010 general population and housing census, only 68 074 of all properties in the country had a property title, of which 14 238 were in Lomé.  A study commissioned in 2008 by the Ministry of Justice found that it took nine steps and 49 procedures to register land in Togo, and cost on average CFA Francs 250 000 (US$500).  Another study commissioned in 2011 in preparation of the Togo Land Code found that a total of 10 government agencies were involved in delivering a land title, through a process costing up to 25% of the property value.  This cost does not include the official cost of the land title, which comes to 11% of the value of the property.

There is no cadastre in Togo, despite the existence of a Central Directorate of Cartography and Cadastre.  It has been reported recently in a diagnostic study on land problems in Togo, commissioned by the Ministry of Urban Development and Housing, that the land title had lost its unimpeachable character due to rampant corruption, which has resulted in many cases of double registration of the same piece of land.  Indeed, there were several court cases pending in which different people claimed ownership of property title on the same piece of land because the registry was corrupted at some point.  It is expected that the new Land Code (still in development) will help to address this kind of problem, streamline the titling procedure and institutions and give back to the land title its value.

The government of Togo has engaged in several reforms to improve the situation.  The preparation of the Togo Land Code, which is at the National Assembly to be passed, is a major step ahead in these reforms.  Hopefully the new elected Parliament will put the Code on the priority list. These reforms yielded some recognition to Togo, which ranked 156th out of 185 economies on the overall ‘ease of doing’ business indicator of the World Bank’s 2013 Doing Business report, up five places from its 2012 rank.  On the ‘registering a property’ indicator, Togo ranked 160th. In 2013, it takes five procedures and 295 days, and costs 12.5% of the property value to register a property in Togo.

Obtaining a construction permit became mandatory in 2007.  The rule is jointly enforced by the Togolese Order of Geometers, the Ministry of Urban Development and Housing, and some municipalities such as that of Lomé or Kara.  In reality it is difficult to get such a permit.  It currently takes 12 procedures and 309 days, and costs 431.5% of the per capita income to obtain a construction permit in Togo – unaffordable for the majority of the population.  People thus continue with direct sales of properties on the basis of a simple sales agreement in the informal market. Sometimes, for those who can afford it, the assistance of a notary is procured. 

Policy and regulation

The successive Constitutions of Togo (including that of 2002, the most recent) recognise the right to housing as a fundamental human right.  However, the regulatory environment around housing and housing finance has not changed much over the past five decades.  Most of the existing policies and regulations to recognise and translate this fundamental right into everyday reality for Togolese citizens were enacted between the 1950s and the 1970s.  Indeed, similar to many countries, especially in West Africa, the government of Togo launched a proactive housing policy in the 1960s and 1970s, which resulted in the establishment of 11 government-supported structures and agencies.

Amongst these were the Centre for Housing Construction (Centre de la Construction et du Logement, or CCL), which was to research and develop building materials at a reduced cost from local resources, the Agency for the Equipment of Urban Land (Agence d’Equipement des Terrains Urbains, or AGETU) which played the role of land developer, the Togolese Realty Corporation (Societe Immobiliere du Togo, or SITO), which was responsible for all operations related to the promotion of housing for the benefit of low and middle income Togolese, the Special Fund for Housing Development (Fonds Special de Developpement de l’Habitat, or FSDH), which was to finance operations and service land for social housing, and the Togolese Sponsorship Corporation (Societe Togolaise de Promotion, or TOGO-PROM), which was to conduct studies, and promote finance and implement real estate, industrial and agricultural projects.

Unfortunately the reality today is that most of these public agencies have failed and were dismantled; only the CCL and TOGO-PROM remain and are still operating.  The only achievement of the SITO was the construction of the Cité de l’Union, a 124 housing unit project near the Lomé airport for the upper middle class in 1980s, and which sold at between CFA Francs 5 million and CFA Francs 10 million.

Because of the failure of past policies, the housing deficit grew over the years and is estimated at around 250 000 today, requiring a supply of 23 000 units a year to clear the backlog.  For several years, especially the decade of embargo on international aid (1993-2007), access to credit became very difficult.  Several banks suspended housing finance and long-term finance, while those which continued to offer finance made it very difficult to access, with soaring interest rates.

Over the decade starting in 2000, the housing and land policy question returned to the public policy agenda.  On the urban and land management front, the government of Togo adopted several policy reforms, including the adoption of the National Urban Sector Policy Statement and the Housing Policy Statement.  In 2009 a new National Housing Strategy was adopted.  The focus of the strategy has been to reorganise the housing sector through the adoption of adequate legislation, improve the existing real estate park and provide all social strata and particularly low and middle income households with affordable housing that meets minimum safety, occupancy, structural stability and temporal standards.  The Strategy stipulates that the government will contribute every year to this demand by facilitating the supply (through public private partnerships and subsidy programmes) of 2 500 housing units against an annual demand estimated at 23 000 units.

Several other reforms were launched, including the revision of the Togo Land Code (which is under way and is expected to be completed this year), the validation of a draft Law on Real Estate Development in December 2010 (which is still to be passed by the National Assembly) and the drafting of the Togo Urban Development and Construction Code.  The Real Estate Development draft law covers areas such as conditions required to perform the profession of real estate developer, social real estate development operations (the law imposes a minimum of 100 housing units for this type of operation) and the production of serviced land.  An important change to be brought into the housing and real estate sector by this code is the creation of a new public entity with the mandate to produce and sell serviced land – the Societe d’Equipement des Terrains Urbains (SETU).  Several other reforms, supported by the International Finance Corporation, are under way to progressively secure properties. 

Opportunities

Togo is recovering from several years of international embargo which ended in 2007/2008.  The government has engaged in several important economic and fiscal reforms which should continue improving the business environment.  With a high demand for housing, several companies have been positioning themselves to take advantage of a market that is still untapped.  For example, in 2010, Shelter Afrique approached the Togo government about launching a major housing project.

According to a recent study by the French Development Agency, the population in Togo should increase by at least 50% between now and 2030, and double by 2050.  The population of Lomé alone should double by 2030 and multiply by a factor of three or four by 2050, depending on the fecundity rate and rural to urban migration.  As a consequence, social demand, including demand for housing, will experience a strong increase, presenting an opportunity for developing innovative housing policies, especially in a context characterised by low incomes.

Websites

www.africaneconomicoutlook.org/en/countries/west-africa/togo/

www.doingbusiness.org

www.hic-net.org

www.mfw4a.org/togo/togo-financial-sector-profile.html

www.uncdf.org/sites/default/files/Project/programme_document_-_togo_2.pdf

www.worldbank.org/projects/P111064/togo-financial-sector-governance-project?lang=en