Trypanosomiasis, a disease transmitted by the tsetse fly, is a major constraint to livestock production and mixed farming in Africa. This study examines the economics of the village production of trypanotolerant cattle recently introduced in an affected area of Togo that was previously virtually devoid of cattle. Social-level economic and private-level financial analyses are performed using a herd model. The results show that cattle production was profitable to society and to cattle owners but that private returns were especially vulnerable in alterations in costs of inputs, e.g. cattle purchase, veterinary care. Private returns were only greater than the opportunity cost of capital because such inputs were highly subsidised. Foreign financed subsidies did not enhance farmers' participation in the development process and distorted the incentive structure. In countries such as Togo where trypanotolerant breeds are available, importation of N,Dama cattle would need careful appraisal as the costs incurred depress social returns.