Interview with Sani Yaya, Minister of Economy and Finance. His area of expertise is banking, finance, and institutional strategies. he is the current President of the Council of Ministers of the Monetary Union West African Union (WAMU) until April 2022.
What are the main guidelines of the 2022 budget?
The State budget for 2022 stands at 1,779.2 billion CFA francs, an increase of 4.51% compared to that of 2021.
Nearly 507.8 billion, or more than 47% of the budget, are devoted to social sectors, notably health, education, and support for vulnerable populations.
Regarding health, the flagship project is strengthening access to healthcare and universal health coverage for every Togolese. I note in passing the adoption of the law establishing universal health insurance in Togo.
Regarding education, the plan is to strengthen school infrastructure, establish centers of excellence and institutes for work-study training for development (IFAD). School buildings will be constructed to increase school capacity by an additional 30,000 classrooms.
Free exam fees continue. This is a measure sought by the President of the Republic to ease the daily lives of Togolese people and maintain their purchasing power.
The priority is also the development of the agricultural sector with the aim of improving yields and promoting product processing. This strategy provides for the creation of agropoles and Planned Agricultural Development Zones (ZAAP).
The government will continue its policy of major works, particularly the development of road, airport and port infrastructure, in order to improve Togo's attractiveness.
I also want to mention the water sector. The government is currently implementing a drinking water supply and sanitation strategy to better guide decisions regarding drinking water management and to provide our hardworking populations with access to drinking water. This is one of the major concerns of the President of the Republic.
The government will also continue to modernize the administration by promoting digital technology. You know that digital technology is the spearhead of this modernization, so it is planned, of course, with the arrival of the submarine cable that increases our internet access capacity, to achieve the ambition of digitalizing our entire economy and our entire administration. Of course, I mentioned the submarine cable, but I also want to talk about the DATA center that was inaugurated very recently, and so all of this constitutes the investments that are likely to modernize our economy. Dematerialization is very important in this ambition, and it is planned to create a biometric identity for all Togolese, which will, in any case, allow for the completion of digitalization and to have a biometric identity for each citizen.
The UEMOA has expressed its desire to switch from the CFA franc to the ECO. What changes will this entail?
This reform introduces three major changes:
First, the ECO will always be pegged to the euro, the current parity will be maintained and France will continue to guarantee the convertibility of the ECO as well as the CFA franc.
The BCEAO will take charge of the entire management of the foreign exchange reserves of the WAEMU member countries and will no longer have to deposit half of them in the French Treasury's operations account.
French representatives will no longer sit on the BCEAO board of directors, the Monetary Policy Committee and the WAEMU Banking Commission.
The last two changes are effective, although some practical or legal details still need to be defined.
The implementation of the ECO, initially planned for 2020, has been postponed due to the pandemic and the need to coordinate this reform with the roadmap for the creation of the ECOWAS single currency.
Do donors support you?
Since the resumption of cooperation between Togo and its technical and financial partners, trust has developed and taken root. This has led our country to receive support in various ways, particularly in the context of institutional capacity building and financial support in terms of program and project grants.
Between 2011 and 2020, loans increased by 42.9% and donations by 20.4%. Over the same period, the average growth rate for loans was 15.9% and donations increased by 5.5%.
Between 2017 and 2020, budgetary support from our partners such as the African Development Bank, the World Bank and the International Monetary Fund increased by 114%, 40% and 97% respectively. Regarding the EU, we are seeing a change in its budgetary support over the period 2015-2020 of 14%.
This support is being renewed and will be strengthened as part of the move towards the vision defined in the government's roadmap (FDR) Togo 2025. This FDR, which constitutes a reference document, is generating interest among our partners. Numerous actions are intended to support Togo through the implementation of reforms. These include, among others:
• the new partnership for reforms concluded between Togo and Germany in June 2021. This new framework already makes it possible to benefit from an amount of 5 million euros through a project which aims at good financial governance;
• the preparation of a new 2022-2024 EU budget support programme, amounting to at least EUR 30 million, with a first disbursement in 2022;
• the updating of the AfDB's Country Strategy Paper (CSP) for the period 2021-2026. Through this document, this institution has set itself the main objective of participating in the acceleration of the structural transformation and diversification of the Togolese economy in order to create decent jobs with high added value, and to build socio-economic resilience for sustainable and inclusive growth. The CSP will be financed by a provisional envelope of 120 million dollars for the first three years;
• a new country partnership framework which is also being finalized with the World Bank for its support over the next five (05) years.
• the ongoing preparation of a new program with the IMF which will allow Togo not only to benefit from financial resources, but also to further strengthen the public finance management system.
Togo aims to become a logistics and financial hub. What measures are being taken to reduce the tax burden on private investors?
This ambition is taken into account by the second strategic axis of the government's roadmap in order to boost job creation.
To support economic operators, Togo has updated its tax system to make it more favorable to investment and trade. The tax system was simplified in 2018 with the passage of major new legal instruments, including the national Customs Code, the General Tax Code (CGI), the Book of Tax Procedures, and the new Investment Code.
To achieve the objectives of the 2020-2025 roadmap, the government is granting an exemption from Value Added Tax (VAT) on agricultural equipment in order to reduce the acquisition costs of agricultural production equipment.
Also, the Government, in the sense of renewing the vehicle fleet, grants reductions and exemptions from customs duties and VAT on the import and purchase of new hybrid and electric vehicles, new and used vehicles up to 5 years old.
Among other measures, the Finance Act provides for tax benefits regarding the restructuring of companies in difficulty which present a significant economic and employment challenge.
In addition to these tax benefits of reducing the tax burden, reforms to the Togolese tax system have improved the quality of services offered to operators, reducing the time and costs of tax and customs formalities. In this regard, it is worth mentioning:
– the simplification and dematerialization of tax, customs and land registry procedures with the creation of a single window for land titles called the single land window (GFU);
– electronic declaration and electronic payment of taxes, duties and levies;
– electronic monitoring of tax documents;
– advance declaration of goods;
– facilitation of trade through the privileged partnership framework (CPP); etc.
To encourage multinationals to set up in Togo in accordance with the special regime for parent companies and subsidiaries contained in the CGI, an exemption from withholding tax on dividend distributions (IRCM) between parents and subsidiaries is provided.
Numerous tax benefits are granted to foreign investors. It is also worth mentioning the existence of a free trade zone. In short, everything is done to make Togo a prime location for investment and, therefore, for development.