Open for Business

LOME, Togo-At first glance, this tiny West African country seems an unlikely place for a debate on the merits of the marketplace as a path to development. But in the last several years, Togo and its three million people have been invaded by droves of development experts advocating everything from small-scale community cooperatives to complete privatization. They come from Europe, the United States, Asia, the Soviet Union-almost everyone, it seems, wants to help Togo develop.

Togo is of interest because it is at a "manageable" stage of development. The country has a relatively well-developed infrastructure that includes an active port and a highway system connecting it with Ghana to the west and Benin to the east. Here, there is none of the urgent, overwhelming hunger of Ethiopia. Although it continues to import wheat, the government boasts it is self-sufficient in food. Literacy and health care standards, boosted by foreign teachers and foreign-built hospitals, are relatively high.

The Gnassinge Eyadema administration--despite recurrent charges of human rights abuses-has been stable for nearly twenty years. It is a staunch U.S. ally, and enthusiastically welcomes the aid and development experts that hope to transform its economy.

For Togo and many developing countries in Africa, it's a question of approaches to development. In recent years, many of the the large-scale infrastructure development programs promoted by the World Bank and other multilateral and bilateral development agencies have been criticized as short-sighted and inappropriate to the host country's needs. The large amounts of money used, and the sheer weight of government bureaucracy have made such large-scale development schemes susceptible to corruption and mismanagement. Small community projects, on the other hand, have often brought about benefits to the local populations but are usually not on a large enough scale.

Now, with considerable prodding from the World Bank and the International Monetary Fund (IMF), many African countries are turning toward a third option-the magic of the marketplace.

In contrast to the 1970s, the prevailing mood among many development economists in the 1980s is "economic pragmatism," a key tenet of which is reducing the size of the public sector in the hopes that private investment will prove more efficient and productive.

Addressing the United Nations Special Session on Africa last April, Secretary of State George Shultz summed up the thrust of this approach: 'The resolution of Africa's economic crisis lies in the liberation of its peoples from policies that have stifled innovation."

Shultz lauded the Lome government among others for "recognizing, as the Organization of African Unity declared last July, that `the primacy accorded the state has hindered rather than furthered economic development.'"

Already, African countries like Malawi, Senegal, Somalia, Ghana and Zambia have bit the bullet and agreed to implement IMF-approved austerity measures while taking steps to remove or reduce state control of their economies. Recently, Tanzania, the flagship of "African socialism" in the 1970s, also signed an IMF agreement to begin to privatize its economy.

Here in Togo, one product of the government's efforts to restructure its economy has been a concerted public relations campaign to bring foreign investment into the country.

Working closely with the World Bank, the government has added further incentives to its already generous investment code.

Togo's latest investment code is designed to create a "dynamic industrial tissue" for Togolese and regional markets, promoting "active and mutually beneficial cooperation" with foreign capital, and encourage industrial decentralization, while ensuring "the creation of jobs for nationals" by favoring labor-intensive technologies.

Featured items of the new code include generous tax reductions and exemptions (from trade tariffs to personal . income tax) and guaranteed repatriation of profits for foreign investors.

The government has also targeted some fifteen of the sixty-odd government companies for "privatization"-the sale or lease to private concerns-by the end of this year.

The only industries that Lome is not willing to sell, according to the Minister of Information, Gbegnon Amegbo, are those it considers to be "strategic," most notably the phosphate, cocoa, and cotton industries, which are the country's major foreign exchange earners.

The government's commitment to privatization has won high marks from officials of the Reagan administration, as well as the World Bank and the IMF, who are eager to prove that private investment can generate quick change where a government-led industrialization drive of the 1970s has advanced slowly.

"Togo is rightly credited for being one of the pioneers in the field of privatization," says State Department official Hugh Williams. "We feel good seeing that they are doing what we call the right thing."

Behind all the rhetoric, however, Togo's ambitious privatization drive is moving slowly. Its greatest success story so far is the leasing of the former national steel mill to U.S. businessman, John Moore.

Approximately sixty state-owned industries-not all of them in operation-continue to dominate Togo's economy, and Moore, at least, believes that of these, only eight to ten will attract foreign investment.

Nevertheless, the high profile that Lome has given to privatization places Togo squarely in the middle of a growing debate over the role of private capital in the developing world. With per capita incomes throughout much of Africa actually lower today than they were in the early 1970s, many Western development economists are turning away from the government-led industrialization programs of that decade, and looking toward the private sector to pull the continent up from its current economic plateau.

"Togo was among the first [in Africa] to fess up to the idea of private capital," following the failure of a 1970s government-led drive toward industrialization, says Stanley Cleveland, managing director of Societe Togolaise de Siderurgie (STS).

Proponents of privatization in Togo like to point to STS as an example of what the private sector can do for Africa. Last May, the steel firm became the first in Togo to float shares on the private market. According to Moore, some 46 Togolese-many of them businesswomen involved in local trade-now own 10 percent of STS. Moore hopes to sell up to 30 percent of STS stock to local entrepreneurs-but intends to retain full voting control over the company.

"There is potential-if it's done right-to make money in Togo," says Cleveland.

The steel mill, built by the government in 1979 with a capacity to produce over 40,000 tons of steel reinforcing bar a year, went broke and shut down in late 1983. Moore, an old hand at rehabilitating defunct steel plants in the developing world, took over STS in 1984.

After spending about $1,200,000 in rehabilitation, new equipment, and the initial start-up inventory, Moore says he made some $300,000 in post-tax profits last year, the plant's first year of operation under private management.

According to Moore, the company paid 41 percent in taxes, which together with lease payments returned some $800,000 to Lome last year.

To make that money, Moore has reduced the company's payroll by more than half, from 350 to 144 workers, and drastically lowered production goals. Last year, the factory operated only 10 days out of every one and a half months, according to Cleveland. The rest of the time, some workers were engaged in processing scrap metal for export to southern Europe. STS officials say they expect to make a 7 percent post-tax profit in 1987 on production of up to 10,500 tons of rebar. Last year, however, STS turned out only 6,000 tons of rebar-less than what the average U.S. company can produce in a day.

The company's exports to nearby Ghana, Mali, Burkina Faso, and Benin enjoy no tariff benefits over European steel. But STS is competitive with European rebar production because transportation costs and travel time are so much lower from Togo.

"It takes us 10 days" to export to Togo's neighbors, said Cleveland, "compared with three to four months from Europe."

The ten-year lease under which Moore operates STS has served as a model for the Danish leasing of the national milk processing plant. In addition, the Shell Oil Company has negotiated use of the Togolese oil storage depot for regional distribution of imported oil products; and an agricultural implements factory has been bought by a French consortium.

The government would also like to privatize a detergent factory, the state trucking company, the textile and cloth-printing plants, and the palm and cottonseed oil factories, but buyers have not yet been found.

Whether or not the government will be able to privatize these and other government-owned companies remains to be seen. Certainly, at its present pace, privatization has a long way to go before it can have any impact-positive or negative-on the majority of Togo's people.

The Peace Corps Fuels Efficiency in Togo LOME, Togo-In the broad scheme of development, improving the cook stoves used by Togolese women might seem a trivial concern. But a new program to increase the efficiency of stoves here promises to significantly reduce the daily workload of women, while cutting back on the rampant fuelwood consumption that is eating into the country's endangered forests. The program, a tripartite effort begun last May by the U.S. Peace Corps, Catholic Relief Services and the Togo government, is based upon a simple, do-ityourself principle of energy conservation. Working with Peace Corps volunteers, women are taught to enclose their traditional, open fire stoves with high walls of clay. When a cooking pot is placed on top, heat can only escape under the pot and through the small gap where new wood is added. The modified stove is made from materials readily available to all women in Togo: mud, straw, and three large stones to act as a frame. It is based upon a model used with some success in Senegal and Benin, that draws upon the cooking techniques and resources used by village women for centuries. In some cases, the new stove has reduced the amount of firewood needed-as well as the time and money spent buying or gathering it-by up to fifty percent. In a country where, according to Information Minister Mr. Gbegnon Amegbo, "women do everything," the improved stove has been praised by the more than one hundred village women throughout Togo who took part in a Peace Corps pilot study of the program last year. Unlike some of its neighbors to the north, Togo isn't yet afflicted with widespread deforestation. But firewood is still the major source of energy for Togo's three million people-and it's becoming scarce. "There are still a lot of forests here," says Mimi Gellat, assistant director of the Peace Corps program in Togo. But, she says, "The desert is moving in pretty fast from across Burkina [Faso], so the government is really trying to push forest conservation in advance of the problem." Throughout Togo, aid workers from Europe, Scandinavia, and the United States are involved in treeplanting programs to shore up the country's dwindling forests. In addition to planting new trees, the government has ordered stiff penalties for farmers who continue, long after the rainy season has ended, to burn their land in preparation for the next year's crop. Because of these and other precautions, Togo last year was spared the destructive rash of forest fires that swept through neighboring Ghana, according to Gellat. Restrictions on the use of firewood have helped to keep deforestation under relative control, but have exacerbated a shortage of wood that makes stoking the family stove an increasingly expensive and timeconsuming endeavor. "Five years ago, I could go out and gather wood enough for my fire each week," said one woman, who runs a beer bar just outside Lome. "Now, there is no wood left to gather, and prices [for wood] are high." Commercial brewers of tchoukoutou, Togo's traditional beer, are particularly hard-pressed, since they must burn enough wood to keep huge pots of liquid boiling for days on end. "We've developed a model that can keep three pots cooking on one stove," said Eric Reed, a third year Peace Corps volunteer who helped to pioneer the stoves project in Togo. "It can save between a third and half of the wood that's burned, so it's been really popular among the businesswomen." With the help of funding from Catholic Relief Services and the U.S. government, as well as a fresh contingent of Peace Corps volunteers, the government of Togo wants to promote the improved stove to some nine thousand women throughout the country. ' But before the cookstoves project can be declared an unqualified success, Reed and his co-workers say they must overcome what remains a major obstacle to all their programs: the difficulty of turning an outside innovation into a domestic institution. While the improved stove is based closely upon the model of its predecessor, integrating the idea of energy-conservation and proper stove maintenance into the busy daily routine of rural women is not easy. Although Togolese women unanimously acclaimed the new stoves that were built for them by Peace Corps volunteers, nearly three-quarters of them said they did not know how to build a stove for themselves. Half of the women surveyed said they prefer to use their traditional stove in conjunction with the newer model. Moreover, the improved stove requires more maintenance than its predecessor-an additional daily chore that many women have little or no time for. In some cases, particularly the poorer households, stoves built at the start of the program had cracked and crumbled to the point where they were no longer saving energy. - Samantha Sparks