Interview: Jim Dutton
How is the government facilitating public-private partnerships (PPP) and foreign investment?
JIM DUTTON: PPPs are key elements for the national development plan going forward. We have worked to establish, in conjunction with the Ministry of Economy and the Ministry of Budget, a funding model for the next 15 years that will involve significant private sector participation. Doing business in Gabon is not as bad as one might think. The administration in Gabon is very conscious of the need to facilitate partnerships. The Nkok special economic zone (SEZ) in particular will be a great platform for investors. It is perfectly possible for foreign investors to come in and do business, in particular if they do it within SEZs, which have favourable terms for both taxation and employment of local staff.
What are the main reasons behind the delays witnessed in the construction sector?
DUTTON: Delays have mainly been due to resource constraints as well as capacity issues. There are a limited number of contractors and equipment providers. We have also seen a shortage of skilled labour, and using expatriate labour can be a challenge. Gabon is going through a post-Africa Cup of Nations (Coupe d’Afrique des Nations, CAN) phase and recovering from a period when materials were overtaxed. In a way, Gabon was a victim of its own success. The significant construction projects for the CAN tapped out supplies of materials and contractors, and stretched infrastructure such as ports, resulting in congestion. Expropriation and land title issues have also slowed the delivery timeframe for ongoing infrastructure projects.
The market needs time to mature. Investors, bankers and developers all want to balance risks against rewards – but the potential risks are too unknown at this point. All of these issues are raising the risk profile for developers. More planning and sequencing could avoid some of these concerns. A formalised system of land titles is needed to expedite the land acquisition process. This will be crucial to attracting a consistent inflow of funds.
In what way can the private sector be encouraged to participate in public housing projects?
DUTTON: The first 2000 social housing units in Angondjé were entirely state-financed. To speed up the process the government contracted high-quality Turkish firms to provide prefabricated materials. Once the initial set of housing units are developed, private developers will then start investing, creating a snowball effect where confidence is established and private investment takes over. This constitutes a sea change in the existing government-led system. Private investment is not only needed for social housing projects, but also for schools, offices, transport infrastructure and so forth.
How can access to financing for infrastructure and housing projects be improved?
DUTTON: One of the key issues for the banking sector is the lack of consistent cash flow from the government, which creates delays for construction. Raising the necessary capital to implement the National Infrastructure Master Plan should be the focus over the next 15 years. Financially, Gabon is well placed and has abundant natural resources – almost unbelievably so. It has a small population, rising GDP and is probably one of the most politically stable countries in sub-Saharan Africa. If you lend money for a living, these are the boxes you want to tick. Gabon does not want to move away from oil, it wants to increase oil production and diversify into other sectors. We need to identify when funds are needed, raise capital and deliver quality infrastructure.
What can be done to increase the availability of skilled labour at the local level?
DUTTON: Partnerships with foreign firms definitely help raise standards. Setting up partnerships with local universities and technical schools, as well as offering internships are key to creating a skilled labour force. Youth and technology are the two elements that can make a change. Reversing brain drain could also be a short-term solution to increasing available skilled labour.
Read More from OBG
