In the 1980s Togo was distinguished by a relatively pro-Western, entrepreneurial stance, but incidents of political violence 1991 to 1994—including the targeting of foreign-owned shops (principally Lebanese and Indian) by rioters in January 1993—and in 1998, following the contested presidential election in June, together with the maintenance of many restrictions on foreign investment and evidence of increased corruption have deterred foreign investment as well as stalled the privatization process. Togo's current investment code, enacted April 1990, was designed as an improvement over the previous code, and offers foreign investors guaranteed repatriation of capital and profits. The former investment code offered tax exemptions, but these were abused, and were removed in the 1990 revision. The investment code, which applies only to foreign investment of more than FCFA million (about $42,000), allows foreign participation up to 100% ownership in eight listed sectors (agriculture, fishing, and forestry; manufacturing; mining; low-cost housing; tourist infrastructure; agricultural storage; applied research; and socio-cultural activities), requires that the business must employ at least 60% local workers and provide at least 25% of the funding. The 1989 export-processing zone (EPZ) law gives companies the advantages of duty-free imports of materials for production, a less restrictive labor code, and the ability to hold foreign-currency accounts. About 35 firms were operating in the EPZ in 2002, representing investments from France, Italy, Norway, Denmark, the United States, India, and China. A severe electricity shortage in the EPZ from March to May 1998 hurt manufacturing enterprises particularly. In 2000 a Franco-Canadian consortium took over the state power company.
The annual inflow of foreign direct investment (FDI) to Togo rose from $23 million in 1997 to a high of almost $70 million in 1999. FDI inflow declined to $57.2 million in 2000, but recovered to $67 million in 2001. As a percent of gross fixed capital formation, FDI inflows rose from 11.3% in 1997 to nearly 35% in 1999, averaging about 30% in 2000 and 2001.
Major foreign investors include the United States, France, Germany, and Denmark. Petroleum products distribution, seafood processing, construction, textile milling, and agricultural processing are the main foreign businesses.