Interview: Nina Abouna
How can non-traditional sources of financing facilitate infrastructure project implementation?
NINA ABOUNA: Infrastructure financing, especially for transport, water, energy and communication networks, requires tremendous capital investments. Currently, these projects are often financed by the government, in large part by the revenues generated by the energy sector. Nevertheless, one should not forget that there are a many ways to finance infrastructure projects, including equity, debt and bank financing, bond issues, as well as through development institutions.
Today, Gabon’s primary ambition is to diversify its economy through massive investments in manufacturing industries and basic infrastructure. In order to achieve this, we will have to find new sources of financing beyond just government funds, particularly since infrastructure projects are generally large-scale and require long-term financing. Additionally, it is true that classic financing sources, such as bank loans, do not really allow for the lending over the long term, especially in large amounts. As a result, like many countries in Western and Southern Africa, Gabon is planning on using infrastructure bonds to finance its projects. Financing through bond issues allows us to diversify our sources of funds, reduce uncertainty caused by banking disintermediation and contribute to the transformation of short-term deposits into long-term resources.
What fiscal incentives exist for foreign investors?
ABOUNA: Thanks to various tax reforms undertaken in the non-energy sector, Gabon has experienced double-digit growth in the secondary and tertiary sectors. Within the General Tax Code, many incentives have been put in place to help new businesses flourish and grow exponentially. For example, businesses enjoy an exemption from corporate tax for the first profitable year for the mining, agriculture and timber industries and a 50% reduction on corporate tax for the second profitable year. Corporate income tax rate has been lowered from 35% in 2012 to 30% for all businesses (excluding the oil and gas and the mining industries). Furthermore, the government is planning to implement fiscal incentives to help develop the fishing industry and to attract foreign players into the sector.
How much can interregional trade be boosted?
ABOUNA: Increasing trade within the Economic and Monetary Community of Central Africa (Communauté Économique et Monétaire de l'Afrique Centrale, CEMAC) is one of our top priorities. In order to do so, we are currently designing a strategy to identify key value-added export industries. We have a large export sector for commodities, but we want to emphasise the country’s appeal in non-traditional sectors, such as processing and manufacturing, to make Gabon more attractive for foreign investors. To that end, we are planning a new awareness campaign and setting up a “single window clearance” that would facilitate import and export activities within the CEMAC region and improve the entire logistics chain. This will not only help raise the revenues of local exporters by improving access to trading partners, but it will also increase the competitiveness of our export industries.
Additionally, the CEMAC has decided to establish a business climate observatory in response to the 2008 economic crisis. Thanks to this initiative, CEMAC countries are seeking to improve regional governance and to alleviate regulatory procedures in order to encourage economic activities in member states.
As far as Gabon’s trade balance with its regional partners is concerned, Cameroon is the nation trading the most with Gabon. To try to remedy this, we are working on improving the business environment and have already taken measures to that end, especially at the administrative level, where drastic improvements have been implemented in terms of efficiency, and we are already seeing the results. Thanks to the improvements in good governance and newly implemented reforms, the country is benefitting from increasing foreign investment inflows from emerging economies.
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