Structural adjustment, privatization and the industrial sector: Lessons from recent experience in the Republic of Togo

Since 1983, the World Bank has been engaged in a Structural Adjustment Program (SAP) with the government of Togo intended to support economic liberalization and implement policy reforms to expand the private sector's economic role, in particular, through privatization of state-owned enterprises (SOEs). This study examines the SAP's impact on Togo's industrial sector using resources and interviews gathered during Fulbright-sponsored field research conducted in 1987. The study finds that although Togo's privatization experience has relieved some of the financial pressures created by loss-making industrial SOEs, it is an inadequate model for future industrial development. Excessive reliance on special incentives and donor support to attract foreign investment leads to harmful distortions that undermine economic liberalization and further constrain the policy choices available to government officials. To promote self-sustained industrial development, Togo should encourage public participation in designing policies that respond more specifically to domestic needs and factor endowments.