Togo Report Reconnecting With West Africa

In a former African colony once the province of Prussian engineers, German businesses are resurfacing, lured by political stability, a growing economy and the fruits of Chinese labor.
A worker sweeping limestone aggregate at a HeidelbergCement factory in Tabligbo, Togo.

Lomé, TOGO -- When Heinrich Walbröl went to the Atlantic coast harbor of Lomé to pick up the German beer he planned to sell in the west African republic of Togo, he was met with an exuberant smile from the Togolese tax collector: “Thank God, the Germans have returned!”

Mr. Walbröl sells Paulaner, a beer made by an iconic Munich brewer, which is one of several German firms now returning for investment opportunities to a country the size of Bavaria or West Virginia about 600 kilometers (372 miles) north of the equator.

Togo, along with Cameroon, Namibia and Tanzania were once German colonies. Many were established under ruler Otto von Bismarck, who ordered the construction of the railroads in 1887.

Germany lost all of its African colonies after World War I.

But business ties persisted over the next century until 1993, when German businesses and institutions began leaving to avoid the rule of former president Gnassingbé Eyadema, who from 1967 to 2005 held the dubious distinction of being Africa’s longest-ruling dictator.

Today, Togo, with 7 million inhabitants and one of the poorest countries on the continent, still bears signs of its time as a German colony from 1884 to 1914 – the old Prussian-era railways, once built to transport rubber, palm, cotton and cocoa, are still in use.

 

The elders in Tomefa, a village outside the Togolese capital of Lomé, throw palm wine on the ground to welcome guests attending the opening of a school built with €35,000 in donations from the German government and private individuals.

 

But now, the wagons transport cement to neighboring Ghana, its English-speaking neighbor.

The rebirth of Togo’s cement industry is one of the most concrete signs of the return of German investment. The new factory, two hours north of Togo’s capital in Tabligbo, cost its owner HeidelbergCement €200 million, or $226 million, to build. The German company used Chinese laborers to build the factory. The cement maker is also building a limestone processing facility 600 kilometers north of the capital in Kara.

The Tabligbo factory produces clinker, the main ingredient in cement.

Togo used to import limestone from Scandinavia, among other places. But then HeidelbergCement found limestone north of the capital on a sparsely populated stretch of red sand plain, enabling it to make cement in a single location.

This is a huge cost-saver, said Andreas Schaller, a spokesman in Heidelberg, Germany, at HeidelbergCement, which operates under the local name Scantogo.

The German company decided to invest millions in Togo because it believes the country is on a path to growth. A good indicator is Togo’s GDP and high birth rate, Mr. Schaller said.

For 2015, the International Monetary Fund expects Togo’s GDP to rise 5.7 percent. In 2014, the country had the 29th highest birth rate in the world, according to the U.S. Central Intelligence Agency’s website.

 

Chinese workers helped build HeidelbergCement's new factory north of the Togolese capital, Lomé. The Chinese government is financing the construction of Lomé's new international airport and a new air carrier, ASky.

 

“We firmly believe that the phase of industrialization is on its way in West Africa,” Mr. Schaller said. “We plan long-term and are looking for investments to bear fruit in the next 30 to 40 years.”

More people need more infrastructure and housing, which requires more cement.

Togo is one of the few countries in its region that is growing quickly.

Mr. Walbröl, the Paulaner beer distributor, said the country’s optimal geographic position and coast made Togo a good place to set up a beer distributorship.

“Togo is centrally located in West Africa,’’ Mr. Walbröl said. “The port is a huge asset.”

There is a growing middle class in Togo, he said, who want to drink beer. About 51 percent of the population hold indigenous religious beliefs, 29 percent are Christian and 20 percent are Muslim.

“Although there are no statistics, I notice families eating out, shopping lavishly at the big supermarkets here and driving expensive cars,” he said.

But his entry into the Togolese beer market wasn’t easy. After he began selling his beer to supermarkets in Lomé, the supermarkets suddenly stopped buying Paulaner from him.

Mr. Walbröl said he never received a formal reason from the supermarkets. He suspects that the other major beer supplier in Togo, the French brewer Castel, may have pressured the retailers to drop his products, but he can’t prove it. He is now supplying restaurants and hotels instead with the famed Munich wheat beer.

The Chinese and the French already have a strong market presence in Togo, competition that is hard to beat, as in the case of Paulaner and HeidelbergCement.

 

A waterfront scene in Lomé, the capital of Togo in west Africa. Commercial freight ships are increasingly docking in Togo to avoid pirates in neighboring Benin and Nigeria.

 

The Chinese are known to be efficient and inexpensive at building infrastructure, but some see opportunity for German quality, which is still in demand more than a century after colonial rule.

“Everyone wants to work for a German company,” Mr. Walbröl said in an interview at his beer distributorship in a one-story yellow-and-gray cinderblock building with a thatched patio near the waterfront in Lomé. “I had people queuing in front of my door when I opened my shop,’’ he said.

Stefan Liebing, the chairman of the German-African Business Association in Berlin, a group that coordinates trade relations, said Africa is becoming an increasingly interesting location for foreign businesses as economies on the continent grow.

 

01_Gross Domestic Product Togo West Africa

 

“The business climate has improved notably compared to the past year,” Mr. Liebing said.

About a third of the association’s members with operations in Africa said they expect revenues to rise, and half expect revenues to stay the same.

Carla Nickel, a spokeswoman at the German-African Business Association, said Togo has "passable infrastructure," including Lomé’s planned new airport, which is being paid for and built by the Chinese Export-Import Bank, as well as a new regional airline, ASky.

But Togo, despite the optimism and foreign money, faces significant obstacles.

 

A beach scene in Lomé.

 

Although the country has had no recorded cases of Ebola, it is being negatively affected by news coverage of the epidemic in nearby Liberia and Sierra Leone. The country has installed warning signs and hand-washing machines in many public places.

Ironically, language is still an issue in the former German colony, which for most of the 20th century until 1967 was ruled by France.

 

A German businessman, Heinrich Walbröhl, has begun importing Paulaner, a Bavarian wheat beer, into Togo.

 

German companies in Togo often lack French-speaking staff, which makes it difficult to set up in Togo, where French is the only official language.

The other stumbling block are national elections to be held sometime in the first half of this year. The country has been ruled since the death of the old dictator by his son, Faure Gnassingbé, whose Union for the Republic party is the dominant political force in the country.

 

Beads at a shop in the Togolese capital. In Togo and some other African countries, women tie beads around their waist to keep track of their weight.

 

Investors will be watching to see whether the political climate under the current president stays stable.

Lomé is also increasingly being used as a haven for commercial shippers, who are taking refuge from sea-faring pirates operating from nearby Nigeria and Ivory Coast. On a recent day in January, the vista of the waterfront at the Boulevard de la République in Lomé was dotted with dozens of large, ocean-going cargo ships parked off the coast.

Mr. Walbröl, the beer distributor who grew up in Cologne and moved to Togo in 2010, hopes more of his countrymen join him. For one thing, that would mean more beer drinkers. But personal interest aside, Togo has its charms.

“You can't experience this kind of freedom in Europe,’’ he said.

 

Sarah Mewes is an editor at Handelsblatt Global Edition. A native of Berlin, the author spent most of her childhood in Togo, where her parents worked for a German international development organization now called the Gesellschaft für Internationale Zusammenarbeit or GIZ. To contact the author: [email protected]