The Report: Gabon 2014

Economy

Classified by the World Bank as an upper-middle income country, Gabon enjoys an average per capita income – estimated at €8950 in 2013 – that is far higher than the sub-Saharan Africa developing country average of €1212.

Oil revenues have sustained the economy, accounting for 56% of total government revenues and 80% of total exports by value, according to US Energy Information Administration (EIA) statistics for 2011. In addition to the hydrocarbons sector, mining and timber activities are major contributors to the economy, primarily through the export of raw materials. With Gabon’s existing oil fields reaching maturity, authorities are looking to minimise the impact of declining oil revenues on the economy, therefore they are embarking on a programme of economic diversification and industrialisation that should also lead to a more inclusive, job-creating pattern of growth. Expansion of the forestry sector, with an emphasis on domestic processing, has the potential to catalyse a more inclusive growth pattern. It is estimated that the economy could grow as much as 6.5% in 2014, following 5.5% growth in 2013 and a 5.7% expansion in 2012.

This chapter contains interviews with Magloire Ngambia, Minister of Investment Promotion, Infrastructures, Housing and Territory Planning; Nina Abouna, Director-General, Agency for the Promotion of Investment and Exports; and Serge Thierry Mickoto, Managing Director, Gabonese Strategic Investment Fund.

Energy

Gabon is the fifth-largest oil producer in sub-Saharan Africa and oil dominates the economy, accounting for roughly half of state revenues and more than 80% of export revenues. Over the last decade, however, output has declined as the country’s larger oil fields mature.

Oil production peaked in 1997 at 370,000 bpd but stabilised in recent years around 240,000 bpd. The decline in production has prompted Gabon to encourage activity in smaller blocks, expand offshore exploration in new blocks, and continue redeveloping existing oil fields. The government has set targets of doubling output to 500,000 bpd and re-joining Organisation of the Petroleum Exporting Countries, which it left in 1997. The government is also taking a more active role in the sector through its still relatively young state-owned oil company, while also tightening oversight. To improve transparency and boost the state’s share of oil revenues, the government has overhauled the legal framework governing the hydrocarbons sector. The new bill was adopted by parliament on July 23, 2014. Under the new hydrocarbons code, the national oil company will have the right to a 15% share in all new petroleum operations, which may strengthen the sector by encouraging shared-equity partnerships between local and foreign players.

This chapter contains interviews with Désiré Guedon, Minister of Energy and Water Resources; Etienne Dieudonné Ngoubou, Minister of Petroleum and Hydrocarbons; Jacqueline Bignoumba, President, Gabon Petroleum Union; and Nicholas Cooper, Executive Director & CEO, OPHIR Energy.

Agriculture & Forestry

With a tropical climate and arable land to spare, Gabon has significant potential to expand agriculture, yet the sector remains somewhat overlooked. One-fifth of the country’s total arable land has not been developed for agriculture, and the country remains largely dependent on food imports to meet its consumption requirements.

The sector has shown recent growth, roughly 5% year-on-year from 2010 to 2013, according to the World Bank. If further developed, the agriculture sector could contribute significantly to overall economic diversification and to a more inclusive pattern of economic growth. The mid-year downward revision in the 2014 budget, however, is likely to limit progress on agricultural development targets in the near term. The political will to expand the sector exists, and the potential benefits of agricultural growth are extensive, particularly for improving human development indicators and reducing poverty.

This chapter contains an interview with Jean-Luc Wilain, Chief Operating Officer – Business Development, IBL Group.

Banking & Financial Services

As a bastion of liquidity within the financially turbulent Economic and Monetary Community of Central Africa (Communauté Économique des États de l’Afrique Cen-trale, CEMAC), Gabon competes head-on with the more populous Cameroon for the title of regional banking centre. The regional stock exchange based in Gabon is also beginning to see an uptick in activity and insurance penetration is consistently higher than elsewhere in CEMAC.

In recent months, banks have sustained the double-digit growth of the past three years, albeit at a slightly slower pace, driven by both deposits and lending. The bulk of growth has been due to lending to the public sector for projects laid out under the Emerging Gabon national development plan. Gabon also has a surfeit of liquidity in the banking sector, reducing the need for companies to turn to the capital markets. Since the first listing in 2008, the markets have been dominated by bonds. However, 2013 saw the region’s first initial public offering and subsequent equity listing on the exchange, and, according to local press reports, other companies are likely to follow suit in the medium term. Home to 1.63m people, Gabon has one of the most dynamic insurance markets in Central and West Africa. The local insurance industry is strong compared to other countries in the region due to its high level of industrial contracts. Efforts to increase insurers’ exposure to clients through investment in multiple sales channels, the introduction of new obligatory insurance lines and the implementation of microinsurance products could all help to expand the Gabonese market in 2014.

This chapter contains an interview with Patricia Danielle Manon, Director-General, BGFI Bank Gabon.

Transport

Transport and logistics in Gabon are in the midst of a major transformation. The government is engaged in a multi-year programme to upgrade the country’s infrastructure, with the aim of making it into a logistics centre for the Economic and Monetary Community of Central Africa.

Gabon’s transport infrastructure is set for a radical overhaul in coming years. A major state investment programme for roads will see the total length of paved roads in the country increase six-fold between 2009 and 2025, including a link between Libreville and Port-Gentil. This should help open up the interior of the country and boost socioeconomic development in previously isolated areas. Expansion projects at Owendo port should also help reduce congestion and hence costs for shippers, and airport capacity in the country’s main cities is set to increase dramatically, allowing international flights to operate out of Port-Gentil.

This chapter contains interviews with Takao Omori, CEO, Portek International; and Frank Legré, Managing Director for Africa, Air France.

Construction & Real Estate

Gabon has concentrated funding on infrastructure in recent years, not only in advance of the Africa Cup of Nations, but also as part of the government’s broader push to diversify the economy through its primary development strategy, Emerging Gabon.

The construction sector – supported by the Infrastructure Master Plan, which includes 114 projects in education, housing and transport – is thus expected to see annual growth of 4.7% from 2013 to 2016, providing for a better long-term outlook. The state continues to play a central role, predominantly through the National Public Works Agency, and publicly funded developments account for a large percentage of ongoing construction activity. Looking ahead, Gabon’s construction sector has plenty of work to carry out. Following the initial slowdown after the Africa Cup of Nations, the sector’s focus has shifted towards infrastructure projects in transport, industry and housing. Despite the fact that Gabon is a middle-income country, inadequate housing in slums is not uncommon, particularly in the capital city, Libreville, where more than half of the population is concentrated. Extensive government reforms have sought to improve clarity on urban planning, access to land, zoning and procurement issues, as well as construction permits.

This chapter contains interviews with Mauricio Toledano, CEO, Eurofinsa; and Luis Castilla, CEO, ACCIONA Infrastructure, Water and Services.

Mining & Industry

Mining

The natural wealth of Gabon is not limited to oil and gas, and the country is turning to mining to help diversify away from its reliance on hydrocarbons.

The African Development Bank estimated that in 2012 the mining sector contributed 6.3% of GDP and 6% of exports, though estimates from the Ministry of Economy and Planning put it much lower, at under 2% of GDP. Either way, the sector has the potential to be a major economic driver, and the government hopes to quadruple mining’s contribution to GDP by 2025 under the Industrial Gabon development plan. In line with the government’s industrialisation strategy, local processing requirements are gradually being imposed to increase the sector’s added value and boost non-hydrocarbons activity, although infrastructure and personnel shortages will be an obstacle to development in the medium term.

Industry

Today, industrial activity is limited to agro-industry, beverages, construction materials and some timber, petroleum and mineral processing, but the state has outlined a plan to establish several industrial clusters by 2025 and double the sector’s contribution to GDP.

Industry was identified as one of three economic development pillars under the Emerging Gabon strategy launched in 2009. Under the Industrial Gabon plan, the state is working to encourage investment in downstream processing for all natural resource operations. Local processing requirements are gradually being introduced, starting with the 2010 ban on raw timber exports, which is helping to increase export value and reduce Gabon’s reliance on hydrocarbons. While the transition has not always been smooth, the economy stands to benefit significantly in the medium term from the uptick in value-added activity.

This chapter contains interviews with Régis Immongault, Minister of Mines, Industry and Tourism; and Pietro Amico, General Representative, Eramet Gabon.

Telecoms & IT

Telecoms

Gabon’s telecoms sector is undergoing an important shift in 2014. The highly competitive market will see two of its four operators merge, potentially changing the balance with the traditional market leader.

The long-awaited launch of 3G service in April 2014 is helping to open new avenues for growth in Gabon’s increasingly saturated mobile telecommunications sector. Subscriber numbers continue to rise, but with real penetration of nearly 100%, future growth will come from the introduction of higher-value services. Competition is fierce with four operators serving a relatively small market, and providers are working to expand their networks and boost service quality.

IT

Gabon aims to transition to a digital economy by 2016, supported by $68m in public and private investment in national infrastructure planned for 2013-14.

Commercialisation of access to the long-awaited Africa Coast to Europe (ACE) fibre-optic cable, expected in early 2015, should propel Gabon’s IT sector forward in the next year. The public sector continues to be the primary digital consumer, but demand for internet connectivity, IT hardware and services is growing rapidly. For now, the market continues to be held back by limited broadband capacity, so 2014 will be focused on efforts to commercialise access to the ACE cable and to expand IT infrastructure both in Gabon and the broader sub-region to meet rising demand.

This chapter contains interviews with Alain Ba Oumar, President, Federation of Operators of Electronic Communications of Gabon; and Axcèle Kissangou-Mouelé, Managing Director, Société de Patrimoine des Infrastructures Numeriques.

Tourism

As oil output declines, the government is looking to encourage growth in the tourism sector, with the aim of developing high-end and luxury ecotourism under the rubric of the Green Gabon strategy for sustainable development.

In spite of the country’s wealth of natural attractions, Gabon’s tourism industry has remained small in both absolute terms and the contribution it makes to the local economy. Between 2006 and 2011 some 100,000 visitors arrived in Gabon, with France ranking as the highest visitor market at around 35% of arrivals. Tourism made up 1.2% of Gabon’s GDP in 2013, but the government anticipated the sector’s contribution will grow 9.5% in 2014, and an annual average of 7.3% through 2024. The sector is set to expand in coming years, pushing up its contribution to GDP.

Health & Education

Health

Covering the 2011-15 period, the National Health Strategy was launched in 2010 and aims to accelerate sector reforms by improving the overall governance of health care, reducing infant and maternal mortality, introducing free maternal health care and investing in infrastructure, especially hospitals.

The country has been rolling out its universal health care system, the National Insurance and Social Welfare Fund since 2008 as part of a broader effort to improve the standard of living. However, challenges such as a shortage of trained medical personnel remain, and the country still has much work to do to meet the goals set for its health care sector. Health spending as a proportion of GDP remains comparatively low and non-communicable illnesses linked to demographic shifts and lifestyle changes, including cancer, hypertension, obesity and diabetes are a growing concern.

Education

One of the three key pillars of the Emerging Gabon strategy is Services Gabon, which addresses the development of a skilled labour force and aims to establish the country as a regional centre for financial services, tertiary education, health and environmentally sustainable development.

Gabon increased its investment budget in 2013 as part of its plan to overhaul public infrastructure across the board. Proposed investment in education in the budget was up 53% year-on-year to €138m. Efforts to identify future economic needs and to bring tertiary education in line with the demands of the job market are vital for the economic growth of the country. Agreements with private companies looking to increase the number of qualified professionals are on the rise, with plans for several new industry-specific schools announced in recent years. The private sector and foreign cooperation will play a key role in improving the educational offering and thereby helping the nation to provide the skilled workers required by its growing economy.

This chapter contains an interview with Simon Ntoutoume Emane, Minister of Labour, Work and Vocational Training.

Tax

In conjunction with Deloitte, OBG explores the taxation system, examining Gabon’s investor-friendly environment. This chapter contains an interview with Nicolas Balesme, Partner and General Manager, Deloitte Touche Tohmatsu Gabon.

Legal Framework

OBG introduces the reader to the different aspects of the legal system in Gabon, in partnership with Deloitte.

The Guide

This section includes information on hotels, government and other listings, alongside useful tips for visitors on topics like currency, visas, language, communications, dress, business hours and electricity.

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