When the ban on timber exports was enacted in 2010, operators and experts in the field voiced strong concerns over the adjustment period within the moratorium, stating that the forestry sector was not sufficiently prepared for such sudden and radical changes. The moratorium brought in its wake various drawbacks, with lasting results still visible today. Operators had to terminate all ongoing contracts due to the immediate implementation of the ban, losing clients to suppliers in neighbouring markets, which continue to export raw timber. According to a survey conducted by the Gabonese Union of Forestry Operators (Union des Forestiers Industriels du Gabon et Aménagistes, UFIGA), Gabonese operators lost about two-thirds of their European market as a result.
Despite the initial impact, the ban has helped encourage industrialisation in the sector. Since 2010 forestry companies operating in Gabon have invested heavily in acquiring the necessary equipment and infrastructure to convert raw wood into veneer and plywood for export, and there is further scope for industrialisation following the July announcement by the Council of Ministers that all Gabonese wood must now be dried prior to export.
New Code
The Ministry of Forestry, Fisheries and Environment is working on the second draft of a new forestry code to replace the 2011 legislation. While the full scope of the reform has yet to be finalised, the draft code aims to boost secondary and tertiary transformation, as well as expand the government’s capacity for sustainable forest management.
To achieve this, the new code plans to amend the percentage of forest land given to operators for production by reducing it from 15m ha to 11m ha. It also aims to increase the forestry sector’s overall contribution to GDP by 10% through more sustainable management and increased wood processing.
The forestry sector is taking an active part in the discussions surrounding the new code. While the sector holds vast potential to positively impact local content development and the economy, some operators remain cautious about the proposed reforms. “By pushing wood processing, companies have to grow larger, yet they are increasingly required to operate on smaller concessions,” said Didier Balzaretti, former managing director of timber company Rougier. Multiple consultations between the government and operators will likely be needed to iron out the more controversial elements of the proposed reforms.
Planning
Out of the 23m ha of forest in Gabon, production accounts for 15m ha, while 13 national parks comprise 3m ha. The remaining 5m ha falls largely in the rural areas category, with a small percentage of that land remaining untouched.
The Project for Forestry Planning (Contrôle de l’Aménagement Forestier, CAF), co-funded by the Gabonese and French governments, was implemented in 2014 in an effort to better regulate production and develop the land in a sustainable manner. The CAF divides Gabon’s forests in four territories: Gamba, Birigou, Minkébé and Ivindo.
The project aims to strengthen the government’s control over both forestry concessions and exploitation, as well as improve the quality and effectiveness of the public inspections of these concessions. In addition, the CAF is charged with enhancing the public sector’s technical skills for more effective monitoring of the forestry sector. “Before, the government did not have the proper tools to control production and monitor sustainable development,” David Inguesa, CAF project coordinator, told OBG. “The goal is to enable the government to know exactly how many cu metres of wood operators expect to cut in any given concession within every territory, so as to better regulate at the macro level.”
Concessions
The Gabonese state awards sustainable forestry concessions (concessions forestières sous aménagement durable, CFAD) to operators that can demonstrate sustainable production plans. “It is a loan,” said Christian Mbina, technical director at the National Agency of National Parks (Agence Nationale des Parcs Nationaux, ANPN). “Companies have more obligations in these forests than rights. There must be a sustainable production plan, that we [the government] approve,” he added.
On recommendation of the ANPN, to achieve Gabon’s sustainability goals each concession is divided into a number of sections. An operator can only harvest from one section of the concession every five years. After five years, the operator must move on to the next section. Each section is further sub-divided into tranches, and operators can only exploit one tranche of one section per year. After 20-25 years, the concession is returned to the state.
To receive a 20-year CFAD licence, operators must first obtain a temporary management, production and transformation licence (convention provisoire d’aménagement, exploitation et transformation, CPAET). After 36 months, operators are required to submit a 20-year development plan, a five-year management plan and a yearly operations plan, whereby operators present their production projections for the individual tranches in each section. After approval, the CPAET is converted into a CFAD licence.
While such sustainable development policies are expected to offer long-term economic and environmental benefits for forestry firms and the country, several challenges need to be navigated in the short term. According to UFIGA, many operators have not yet been awarded a concession contract despite having submitted the required documents and completing the 36-month application procedure.
Production & Exports
In 2015 the forestry sector’s production increased by 5.3% to 1.36m cu metres, up from 1.3m cu metres in 2014, according to data from the General Directorate of Economic and Fiscal Policy. The sector’s turnover was up slightly, at CFA34.9bn (€52.4m), an increase of 0.7% from CFA35.2bn (€52.8m) a year earlier. Around 80% of Gabon’s annual wood production is exported, primarily to Northern Europe and China. The Middle East is also a key customer, as the indigenous hardwood okoumé, which accounts for 80% of the country’s timber resources, adapts well to the region’s hot climate.
More destinations could potentially be added in the future, according to Jean-Christophe Ricordeau, deputy director-general at the Société Equatoriale d’Exportation Forestière, a wood export company. “There are about 300m potential clients in Gabon’s radius, but many challenges remain to reach them. The biggest potential lies in Nigeria, Angola and the Democratic Republic of Congo,” he said.
Financing
The French Development Agency (Agence Française de Développement, AFD) has taken an active role in working with local banks and operators to facilitate access to financing. Its first project of this kind – working with small permit holders to improve their knowledge of available mechanisms of financing and methods of access – ended in December 2014. “Eight out of every 10 companies do not even knock on the door of a bank because they view banking as a world they cannot possibly understand,” Jean-François Cornu, loan officer for the AFD in Gabon, told OBG. The AFD provides a guarantee mechanism to banks in an effort to lower their risks on investment credit, which is currently perceived as more vulnerable due to sustainability challenges, the type of machinery being operated and the obstacles the sector has faced in recent years.
Prospects
Given the country’s low deforestation rate – 0.01%, according to the Ministry of Forestry, Fisheries and Environment – coupled with government efforts to ensure sustainable production, as well as the need to diversify income sources in light of lower energy prices, the forestry sector will likely continue to grow in the near future.
Despite increasing its GDP contribution from CFA100bn (€150m) to CFA110bn (€165m) in 2009-15, the industry’s share in the economy dropped from 4.3-4.5% to 2.3%. To boost its economic value, more investment is needed in processing, from machinery and factories to skilled workers. The processing workforce saw a more than 160% increase in 2009-15, from 3000 to 8000, amid a 13% drop in the forestry workforce, from 15,000 to 13,000 employees. The creation of the special economic zone of Nkok, specialised in wood processing, is a step forward, having already attracted several international players.
Such improvements cannot be made without the right incentives or the local training centres needed to meet the sector’s demands. Here, the new forestry code has a key role to play. Although it has yet to be passed by the national assembly, talks between operators, unions and the government are crucial to ensuring the code is attractive to investors while also encouraging sustainable development and production in one of the sectors with the most potential to reduce the country’s dependence on hydrocarbons.
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