Boosting Rural Development in Togo: The Path to Modernizing Agriculture and Infrastructure

The World Bank’s Public Finance Review highlights the need for improved public investment management to drive rural development in Togo, focusing on modernizing agriculture, expanding rural electrification, and enhancing road connectivity. The report emphasizes reforms and private sector engagement to overcome challenges in infrastructure and agricultural productivity.

The World Bank’s Public Finance Review (PFR), prepared by a team led by Marc Stocker and Vanessa-Paradis Olakemi Dovonou Lamissi, provides an in-depth analysis of how improved public investment management could accelerate rural development and structural transformation in Togo. The review focuses on agriculture and infrastructure, particularly in rural areas, where about half of the population below the national poverty line depends on agriculture for their livelihood. Despite Togo's efforts to increase public investments, the country has struggled with low agricultural productivity and poor rural infrastructure, which hinder market access and opportunities to attract private investment. The report stresses that a holistic approach is needed, combining improvements in public investment management with efforts to modernize agriculture and enhance rural connectivity to combat poverty and drive economic transformation.

Rising Public Investments, But Low Capital Returns

Over the past decade, public investment rates in Togo have risen, but the capital stock per person remains lower than it was in the early 2000s. The main reasons for this include insufficient resources, weaknesses in investment management, and the country's vulnerability to climate shocks. While Togo's growth performance has been robust in recent years, the quality of its infrastructure remains poor compared to regional and global peers. The report suggests that improving the efficiency of public investment could lead to significant gains in infrastructure quality, with potential improvements of up to 37% without additional financial resources, if Togo can match the investment efficiency of countries like Bangladesh and Vietnam.

Agriculture Faces Challenges from Low Productivity

In agriculture, which employs over 70% of the rural population, the sector continues to be characterized by low productivity and inefficient farming practices. Many farmers remain trapped in subsistence farming due to the lack of access to fertilizers, seeds, irrigation, and mechanization. Only 37% of agricultural households use fertilizers, and less than 1% have access to irrigation systems. This limits the sector's ability to contribute to national food security and meet the demands of growing urban populations. The PFR highlights that while agriculture receives a higher budgetary commitment than in other countries in the region, public spending in the sector has recently declined. There is a significant funding gap between the government's agricultural ambitions and the resources allocated to achieve them. Furthermore, agricultural research and extension services, critical to boosting productivity and resilience, remain underfunded, receiving only a small portion of the overall budget. The reliance on external financing for agriculture has increased, and domestic investment in the sector has declined, creating a situation where critical agricultural projects face delays and insufficient support.

Rural Electrification Struggles to Keep Pace

Rural electrification is another major challenge addressed in the review. Access to electricity has improved in urban areas, where the rate is close to 96%, but rural areas lag far behind, with only 25% of the population connected to the grid. This disparity significantly limits rural development, as reliable electricity is essential for modernizing agriculture through irrigation, post-harvest processing, and longer working hours. The government has implemented several initiatives, including the CIZO project and the Togolese Agency for Rural Electrification and Renewable Energy (AT2ER), but progress has been slow due to financial constraints and governance issues within the public utility company CEET. These issues include poor targeting of subsidies and operational inefficiencies, which have diverted resources from needed investments in rural electrification. The review stresses that addressing these governance challenges is critical to improving service delivery and expanding access to electricity in rural areas. Reforming the electricity tariff structure to better serve poorer households and ensuring that resources are allocated more effectively will be essential to achieving Togo’s electrification goals.

Improving Rural Roads for Better Connectivity

In terms of rural road connectivity, the report notes that while Togo has made significant investments, many rural roads are unpaved and vulnerable to climate-related damage. This not only hinders farmers' ability to access markets but also discourages private investment in agriculture. The review suggests that substantial investment is needed to improve road maintenance and expand rural connectivity, but it also warns that such efforts will become increasingly costly over time. The government’s ability to finance these projects is constrained by tight fiscal conditions, so mobilizing external resources and private sector participation will be key to closing the infrastructure gap. Climate resilience must also be a priority, given the country’s susceptibility to climate shocks that frequently damage roads and bridges, causing economic losses and disrupting transport networks.

Targeting Reforms for Sustainable Growth

The PFR concludes with several key recommendations for improving public investment management, boosting agriculture productivity, and strengthening rural electrification and road infrastructure. It emphasizes the importance of legal and operational reforms to ensure that public investments are better aligned with strategic development goals and that resources are used efficiently. Leveraging private sector investment will be crucial to meeting the country’s development needs, particularly in the context of limited fiscal space. The review underscores the need for a more transparent and efficient preparation of public-private partnership (PPP) projects, which can help mobilize private capital for infrastructure development. Ultimately, the report highlights the potential for Togo to achieve meaningful structural transformation through better public investment management, targeted agricultural improvements, and enhanced infrastructure, provided that governance issues are addressed and private sector engagement is prioritized.