Togo raises fuel prices as shrinking reserves test economic resilience

Thursday 17 - 20:29

A sharper fuel-price squeeze is being felt across Togo as rising international oil costs put additional pressure on the government’s ability to cushion consumers. Since September 11, the price of a litre of unleaded petrol in Lomé has risen from 725 to 817 CFA francs, marking the second increase in four months.

The latest adjustment is adding to the financial strain faced by households and businesses, particularly those whose daily activities depend heavily on road transport.

Rising oil costs put pressure on Togo’s fuel policy

The increase comes as international petroleum prices make it more expensive for governments to maintain fuel subsidies. Economist Junior Laris said the pressure was compounded by the gradual depletion of the emergency reserves maintained by the state to help manage potential supply disruptions.

These buffer stocks have provided an additional layer of protection during periods of pressure on the fuel market. Their declining availability, however, limits the government’s room to absorb further increases without passing part of the cost on to consumers.

For transport operators and small businesses, the impact is immediate. Motorcycle taxi drivers, delivery workers and traders must now devote a larger share of their daily income to fuel, while many have limited ability to raise their own prices.

Delivery workers face tighter margins

Abraham Amevor, a motorcycle delivery worker in Lomé, illustrates the pressure created by the latest increase. He said the amount he previously spent on fuel was enough to cover his working day, whereas he now needs to spend significantly more.

His situation is complicated by the fact that his delivery rates are set by the company he works for, leaving little scope to compensate for higher operating costs through increased prices.

The effect extends beyond individual workers. Higher transport expenses can feed into the cost of goods and services, while businesses that cannot immediately pass the additional expense to customers may see their margins narrow.

Subsidies reduced under fiscal pressure

The Togolese government has retained a partial subsidy to limit the impact of higher petroleum prices. The allocation for petroleum products is expected to reach 14.2 billion CFA francs this year, compared with 25 billion CFA francs in 2025.

The reduction reflects broader pressure to contain public spending, including measures associated with the country’s engagement with the International Monetary Fund.

At the regional level, the challenge is unfolding against a modest increase in inflation. The Central Bank of West African States (BCEAO) has recorded a rise in regional inflation from 0.2% to 1.4%, adding another constraint to policymakers seeking to protect purchasing power.

How long can the government absorb the shock?

For Junior Laris, maintaining the current price of 817 CFA francs per litre could remain possible in the coming months, but sustaining such support indefinitely would become increasingly difficult.

Rather than relying permanently on fuel-price subsidies, the economist points toward stronger social protection measures, including basic social programmes and potentially renewed cash transfers aimed at lower-income households.

Such an approach would shift part of the response away from subsidising consumption for everyone and toward targeted assistance for households most exposed to higher living costs.

A broader economic challenge

The fuel-price issue comes as Togo continues to diversify an economy that remains strongly connected to agriculture. Over the past two decades, new service activities and industrial sectors have expanded, while investment in port infrastructure has strengthened the country’s role as a commercial corridor in West Africa, according to the Organisation for Economic Co-operation and Development (OECD).

However, infrastructure gaps remain a structural obstacle. Limited transport and energy infrastructure in less-developed regions continues to constrain efforts to expand industrial activity and spread economic opportunities more widely.

For now, the increase at the pump is being absorbed at several levels of the economy. Households are adjusting their budgets, businesses are reassessing their costs and transport-dependent workers are facing tighter margins.

For the government, the challenge is increasingly one of balance: limiting the impact of higher fuel costs while maintaining control over public finances. How long that balance can be maintained will depend heavily on international oil prices, the evolution of domestic inflation and the state’s remaining fiscal room.