# **6 Analysis of Potential Constraints to Growth**

**Recent enterprise survey data**<sup>**28**</sup> **for Togo offers an important source of information about the main business constraints faced by firms in Lomé, as declared by interviewed firm representatives**<sup>29</sup> . However, as discussed in Section 2, perception data has a number of caveats and limitations so the reliability and interpretation of each of these will be discussed below, when combined with other types of data.

**Figure 23 suggests that Political Instability, Access to Finance, Corruption, and Informal practices of competitors, are the main constraints to businesses in Togo.** Other constraints often mentioned are Trade and customs, Electricity and Tax rates and administration. Interestingly, potential problems such as Crime/Theft/Disorder, Court, Labor regulations and Labor Skills are more or less never mentioned as major or severe constraint. Even Access to land, Business licensing and permits, and Transport are mentioned by a surprisingly low number of firms, but this result will be further discussed below. When breaking down the ICA result by size of firms (Figure 24) we see that micro and small firms see political instability as the main constraint, while medium firms mostly complain about access to finance and large firms about political instability.

**Figure 23: Main Constraints to Business (ICA), Togo, 2009. Percent of Firms perceiving a category as the main constraint.**

<!-- Start of picture text --> 30%<br>25%<br>20%<br>15%<br>10%<br>5%<br>0%<br><!-- End of picture text --> _Source_ : ICA data, World Bank.

**Figure 24: Main Constraints to Business (ICA), by Size of Firms, Togo 2009. Percent of Firms perceiving a category as the main constraint.**

<!-- Start of picture text --> 40%35%30% Micro and Small Firms 40%35%30% Medium Firms 40%35%30% Large Firms<br>25% 25% 25%<br>20% 20% 20%<br>15% 15% 15%<br>10% 10% 10%<br>5% 5% 5%<br>0% 0% 0%<br><!-- End of picture text --> _Source_ : ICA data, World Bank.

> 28 <u>www.enterprisesurveys.org</u> Enterprise survey data is available for over 100,000 firms in 117 countries. The surveys include indicators that benchmark the quality of the business environment across countries. They are commonly referred to as “Investment Climate Assessment” (ICA) indicators. Togo’s business enterprise survey was concentrated in the capital city, Lomé, and includes 300 enterprises, of which 145 are micro firms (0‐4 workers); 99 are small (5‐19 workers); 41 are medium (20‐99 workers); and 15 are large (over 100 workers). These firms are also broken down into 19 firms within the Free Zone (FZ) and 281 non‐FZ. Considering the survey structure, the 300 firms in sample represent over 1,700 firms in Togo.

29 Enterprise surveys always include this type of question, providing a list of 15 candidates from the topics mentioned above. The interviewed can provide up to 3 answers: The top, second and third most serious obstacle to business. Note that we in this study report the number of firms expressing a category as the most severe constraint, while the Investment Climate Assessment of Togo 2010 report both the firms that saw it as a main and a severe constraint.

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