liberalization in 1996 and saw increased returns for planters. However, production has stagnated due to the inefficient institutions established to provide technical extension services, cutting of 60 percent of the planters from crucial advisory services. Alternative institutions to support the agricultural sector is yet to be developed and those are expected to be a mix of public and private initiatives (see further a more detailed discussion in the agricultural section of the Togo Country Economic Memoranda, 2010).

# **7 Conclusions**

As is the case in low‐income countries, many issues appear to be constraining economic activity in Togo. However, a first step is to exclude those potential constraints that do not show signs of being binding at this moment. Among those are 1) _human capital_ (however, it may need to be addressed today for future needs), 2) _geography_ , 3) _macroeconomic stability_ , and 4) _self‐discovery_ . It is noteworthy that these conclusions are based on the given level of stocks and flows at the time of the analysis, and any subsequent decrease in these levels may change their status as binding constraints. A second step is to determine if the constraint appears to be on the cost or return side of investments and entrepreneurship, which in the case of Togo, evidence indicates problems related to returns of investments despite a continued need to improve access to capital and financial intermediation.

_Infrastructure_ measures give mixed signals in terms of scarcity at his moment in time. For instance, few firms complain about overall infrastructure and the supply in relation to countries at similar development levels is not exceptional. However, much of the Togo infrastructure was destroyed in recent flooding to the detriment of the greater economy.. The mixed signals are also indicative of the fact that some types of infrastructure present greater and different challenges than others. Moreover, infrastructure as a constraint must be understood in the context of Togo’s growth strategy as a regional trade hub in addition to its goal of broad‐based growth and the need to connect firms outside Lomé. Taken together, Togo must ensure that the increased focus on infrastructure remains as donors re‐engage and support public investments.

_Access to credit_ for the private sector is yet another potential constraint that gives varied signals. Credit emerges as a severe and high‐ranked constraint to business according perception surveys at an enterprise level; however, this is the case in most countries surveyed. To this end, it is unclear if the low amount of credit is a result of lack of demand (i.e. given the level of economic opportunities today, few firms are prepared to take a loan and make risky investments), or a lack of supply mainly in terms of financial intermediation now that international finance has returned to Togo. In this sense, the possibility of financial intermediation as a potential binding constraint is – in a similar fashion to infrastructure – already being addressed through several measures. At this point, it is crucial to, at the very least, implement the necessary banking sector reforms and continue to pay close attention to access to credit as a constraint. Improvements will have to be continuously realized as economic opportunities and demand for credit arises.

A prominent area in terms of constraint to growth in Togo is _governance issues_ , in particular political instability, corruption, and governance efficiency. In nearly every measure of governance, Togo’s performance ranks last when compared to neighboring countries with very little documented progress to date. Political stability has improved since the latter part of the 1990s and more prudent macroeconomic reforms and policies have been implemented. However, if and how these improvements translate into increased trust among investors is debatable according to perception data from domestic investors and the limited FDIs recorded. Not least, the low governance efficiency in Togo has been traced to mismanaged SOEs and lack of public investment execution. As with several of the measures, this may be more connected to previous governments and whether more sustainable and thorough reforms happen in the future remain to be seen.

Governance issues are also related to investor trust in business‐government relations, which according to the analysis is an obvious binding constraint Togo needs to address. Foremost, _barriers and costs of doing business_ are high, especially when starting a business, and compare poorly to countries at the same development level. Even though the over‐arching issue of doing business is critical to tackle, priorities are important. For instance, tax 56