| Grant Profile: |
| Project Title: |
Private Sector Revitalization |
| PCF/LICUS/SPF: |
SPF |
Status: |
Open |
| File Number: |
| Region: |
AFR |
| Sector: |
Health and other social services |
Country: |
Togo |
| FY approved: |
2010 |
Grant Theme : |
Social dev/gender/inclusion |
| Keyword(s): |
Civil society / NGOs;Media and communications |
Approved Amount: |
$1,100,000.00 |
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Grant Recipient:
Ministry of Economy and Finance |
Grant Purpose:
The objective of the grant is to improve the investment climate and facilitate Small and Medium Sized Enterprises (SMEs) start-ups. The grant will help Government identify and implement business-friendly reforms to attract investments; and directly assist SMEs that are starting-up and encourage entrepreneurship.
The intended beneficiaries are SME start-ups, young entrepreneurs, two government ministries responsible for promoting the private sector and youth employment; and private sector organizations such as the Chamber of Commerce, the Chamber of Arbitrage and the Patronat.
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Grant Activities:
Component (1): Strengthening the Business Environment.
This component consists of three main activities: i) reforms to make it easier to create and register new businesses; ii) assistance to prepare a new investment code; and iii) preparation of an analysis of Togo’s Free Zones and how to improve their operations.
Reforms to make it easier to start a business: The government has already begun implementing important reforms in this area by creating a “one-stop shop” (Guichet Unique) in the Chamber of Commerce where all services relating to creating and registering a business have been centralized. However, the one-stop shop is not operational as it lacks basic equipment and staff needs to be trained in services delivery. The grant will finance equipment and technical assistance to the one-stop shop so that it can become operational and deliver satisfactory services to clients. This is expected to reduce the number of days it takes to register a business—which is one of the key impediments to creating formal businesses—from 53 to 25 days by end of project.
Drafting a new investment code: Investment codes define incentives for individuals and firms to invest in a given country and are an important tool for promoting investments and increasing economic activity. The current investment code in Togo was prepared in the 1990s and is no longer adequately suited to investment concerns today. This activity consists of providing technical assistance for the drafting of a new investment code that is in line with international best practices, regional standards (UEMOA/OHADA guidelines) and takes into account specific investment and business opportunities in Togo, including in the Free Zone area. The preparation of the new investment code will be done with the private sector and civil society through a participatory and iterative process. The activity will include workshops and training that will cover regional best practices. In addition to providing technical expertise for drafting the Code, SPF funding would foster public private dialogue through assistance in organizing stakeholders meetings.
Review of Togo Free Zone Law: Togo’s Free Zone hosts the country’s manufacturing industry. It has a high potential for growth and is attractive to investors because of liberal tariffs and low labor wages. In 2007, 8,220 people were employed in the Free Zone, representing wages of 5 billion FCFA (over $10 million). However, it suffers from high factor costs (power, telecommunications and transport costs) and governance issues that have dampened investor interests. The government has begun to adjust the free zone regulation by changing fiscal requirements but this has had a negative impression on investors. This activity will consist of financing of TA to undertake a review of Togo’s Free Zone law and to prepare revisions to the law that are in line with international best practices and country-specific needs. This activity will be coordinated with the revision of the Investment Code given the need to ensure coherence and complementarities between the two.
Component (2): Building Capacity for Advocacy and Preparing a Private Sector Development Strategy. Organizations such as the Patronat and Chamber of Commerce have the potential to play a more significant role in identifying practical solutions to private sector challenges and supporting good governance though compliance with the rules and regulations applicable. However, because of the decade-long inactivity and the weak state of their membership, they lack financial and human resources to fulfill their advocacy and capacity-building mandate. The Chamber of Commerce, which hosts the one-stop shop for registering a business, and the Chamber of Arbitrage have requested assistance in promoting governance reforms in partnership with government. This component will provide technical assistance and finance basic equipment for the Patronat and Chamber of Commerce; finance workshops, consultations and other activities for the preparation of a private sector development strategy and to monitor business reforms; and build capacity of public sector actors responsible for promoting PSD.
Technical Assistance & Basic equipments: Members of Patronat and Chamber of Commerce have expressed the need to assist their representative organizations through provision of sector specific trainings for best practices, internal training to organizations on how to structure for more efficiency and the type of services that can be provided to members. The two organizations would like to further exchange and network with similar regional organizations through south-south partnerships.
Private Sector Strategy: This component will focus on i) financing professionally facilitated workshops and working meetings on selected industry and private sector themes, with the participation of the Patronat, Chamber of Commerce and government representatives to build consensus on a private sector reform program and strategy (see annex 2 for proposed themes). The discussions would be tailored to i) strengthen the knowledge base of the participants; and ii) assist Togo in organizing the first Presidential Investment Council. The PIC would monitor reforms and organize yearly meetings between private operators and Togo’s President. The PIC would also raise the profile of the private sector strategy and the corresponding action plan for reform.
Themes proposed by stakeholders could include, Tax law and Togo's fiscal system; competitiveness and regional integration; commercial debt; foreign investment and investment promotion; professional training and employment; good governance and anti-corruption in the private sector; the role of the private sector in Togo's development; and strategies for promoting SMEs. Each workshop would be organized and hosted by either the public or private sector, and there would be a tripartite team (public, private and civil society) to work on the issue. Following each workshop, the team would prepare a report including recommendations on how to address the issues and these recommendations would feed into a private sector strategy.
Capacity Building for Public Sector Agencies in charge of promoting Private Sector and Employment: The grant proposes to build the capacity of two key government agencies. The first is the Ministry in charge of Private Sector Promotion which represents the public interface for private sector and champions reforms to improve the business environment. The second is the Youth Promotion Secretariat, a new agency with few resources and weak capacity. Under this component, the grant will support consultant services and training activities. More specifically, a performance management specialist will design a monitoring and evaluation system for the Ministry to track the reform program and its impact. The Secretariat needs technical assistance to prepare a Youth Employment Strategy. In addition, the SPF would provide funding to hire two or three university graduates on scholarships system to assist the Secretariat for 3 months.
Component (3): Promoting Entrepreneurship and SME Development: Youth constitute over 65 percent of Togo’s population and many of them are unemployed and have few prospects for adequately supporting themselves. Unemployment is high, at 30 percent overall, and represents a threat to stability. Given the few salaried formal job opportunities, self-employment represents one of the best options for creating employment in the short term. This component will provide direct assistance and incentives to serious young entrepreneurs who want to start a business, and consists of two sub-components:
Capacity Building for SMEs and new Entrepreneurs: SMEs lack of access to relevant training, including in basic business management. This activity will finance the preparation of training materials in local languages for entrepreneurs on accounting, marketing, financial management, business planning, and how to prepare bankable business plans to access credit and grow a business. The project will work with local training centers and involve the private sector and government agencies in the activities.
Technical Assistance for Development of National Employment Strategy: This subcomponent would provide access to expertise and promote south-south cooperation to enable Togolese authorities to develop sound and practical reforms. The new authorities are sensitive to promoting employment and have organized several discussions on how to promote employment. The government program would benefit from technical assistance to ensure that the employment strategy incorporate international best practices and is consistent with national development objectives.
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