Blog: The COVID-19 crisis causes a loss of turnover for almost all Togolese companies
The COVID-19 crisis is stemming the growth experienced by the Togolese economy since 2008. Scenarios predict a decline in Gross Domestic Product (GDP) and an increase in the rate of inflation if no action is taken.
A survey carried out by the Chamber of Commerce and Industry of Togo (CCIT) highlights how fragile the private sector is, and provides a glimpse into the precariousness of the gains that were made thanks to the reforms in the 2018-2022 National Development Plan.
A drop in turnover for 93% of Togolese companies
While the impact of the crisis varies between sectors, a drop in sales stands out as the biggest problem faced by Togolese companies. From January to February 2020, while not a single case of COVID-19 had been detected in Togo, almost 54% of the companies surveyed had experienced a decline in their turnover as a result of a decrease in commercial transactions between local businesses and affected countries. This percentage almost doubled between February and March, when 93% of the companies questioned recorded a decline in turnover.
Note: The figure shows the companies' responses to the following questions: "From January to February 2020, was your total turnover increasing, stable or decreasing?" and "From February to March 2020, was your total turnover increasing, stable or decreasing?".
Source: Survey conducted by the CCIT from 27 March to 28 April 2020 about the effects of COVID-19 on the activities of Togolese companies.
A detailed analysis shows that 62% of the companies surveyed recorded a decrease in their turnover of more than 50%. The services sector, representing more than 49% of GDP, is further weakened. About 68% of the companies in this sector suffered turnover losses of more than 50%. As the pandemic spreads, the barrier measures put in place by the government have forced them to reduce their activities and bear additional costs linked to the adoption of prevention and awareness-raising measures. The hospitality and catering sub-sector, which is also facing the effects of the curfew that was imposed on 1st April 2020 and the immediate closure of land and air borders, which led to the desertion of hotels and restaurants frequented mainly by tourists, is without doubt the most affected. One in two companies in this sub-sector recorded a drop in turnover of more than 75%. A prolongation of the pandemic could lead to job insecurity in the sector. The health, transport, education and import-export sub-sectors have also experienced tangible disruption.
Companies are mobilizing to tackle the crisis
Various strategies have been adopted by the companies to tackle the crisis, such as part-time work (53.8%), temporary closure (24.6%), making all or some of their employees redundant (21.3%), reducing production (13.3%), dismissal (5.2%) and 2.7% have simply changed their business activities. The government has also taken action to help the most vulnerable sectors in society, in particular by disbursing 2 billion CFA francs for urgent actions, by creating a National Solidarity Fund of 400 billion CFA francs and by setting up a cash transfer system for people who are the most vulnerable and most affected by the crisis (the Novissi program), by providing free water and electricity for a period of three months for the most vulnerable groups in society, and by reducing water connection charges from 75,000 to 25,000 CFA francs. The majority of companies deem these measures to be appropriate. Operators would nevertheless like the State to take action for young companies, especially regarding access to public markets.
In the current state of the pandemic, more than half of the companies believe they are able to restart their activities, in particular those active in industry, mining, construction and public works, services and agriculture. If the pandemic lasts more than three months, more than 92% of the companies questioned do not believe they will be able to repay their loans and 84% do not believe they will be able to pay their employees. This reflects the situation businesses find themselves in, especially since a majority of them indicate that access to finance is the biggest challenge they face.
The CCIT’s suggestions for overcoming the crisis
In order to best help companies to overcome this crisis, the CCIT, in its role as representative and intermediary, suggests deferring loan repayments free of charge, subsidizing measures to protect employees and clients against the pandemic, promoting local consumption, guaranteeing small businesses access to funding, issuing grants and concessional loans, providing special lines of credit in the form of loans and tax reliefs for large businesses, temporary exemption from paying personal income tax, and corporate tax for SMEs, and tax measures for sub-sectors experiencing considerable difficulties. The CCIT also encourages private sector partners to defer the payment of rents for a period of at least three months.