Gabon: Organising public tenders
In light of the dramatic increase in government spending since 2009, authorities in Gabon have recently moved to create a Public Procurement Regulatory Agency (Agence de Régulation des Marchés Publics, ARMP) that will be tasked with overseeing and streamlining procurement.
In a region where bidding for public contracts can be a protracted affair, the ARMP is expected to assist the government in setting policy and regulations on public procurement, develop sector training mechanisms, implement independent technical audit procedures, penalise firms that fail to comply with regulation and ensure out-of-court settlement of any disputes arising from public contracts. The agency should have full financial and administrative authority from the state, with its own regulatory board and permanent secretariat. The project was approved by the Council of Ministers in late February, but no timeline has yet been announced for its implementation.
The establishment of the ARMP is part of a broader effort to bring clarity and rigour to the construction sector, particularly when it comes to investments in national infrastructure. In 2010 the government established the National Agency for Public Works, which helped the state to create an overarching infrastructure development plan and now oversees all major building projects. The ARMP is expected to streamline the procurement process and alleviate some of the difficulties private sector players have experienced with the allocation of public contracts and payment timelines.
Effective management of the government’s construction programmes is important to minimise waste and maximise potential benefit to the economy. Indeed, an increase in construction activity has been a key factor in Gabon’s recent economic expansion, along with growth in the wood processing and mining sectors. Real GDP rose by 6% in 2012, following an increase of 7% in 2011. Non-oil GDP growth was 12.1% and 8.7% in 2011 and 2012, respectively.
This recent growth has been largely on the back of an expansionary fiscal policy, with the government registering a deficit in 2012 for the first time since 2000. According to the IMF, oil revenues increased by 80% between 2009 and 2012, but public expenditure jumped by 70% over the same period. This is after the current account balance went from a surplus of 22% of GDP in 2008 to 8.2% in 2009, according to the “African Economic Outlook”. This rise in spending was largely due to growth in capital expenditures devoted to infrastructure projects, some of which were associated with hosting the 2012 Africa Cup of Nations football tournament. Between 2009 and 2012, many projects were successfully completed, including upgrades to the Libreville and Franceville airports, the construction of two new highway interchanges to ease traffic flow in the capital, and expansion at the airport in Port-Gentil.
A number of major public works are also in the pipeline. The country’s first continuously paved north-south highway is slated for completion in the next 3-4 years. Meanwhile, progress is being made on a third interchange in Libreville’s Charbonnages neighbourhood, as well as a number of slip roads meant to alleviate congestion on the expressway between Libreville and the port of Owendo. Plans are also moving ahead on the construction of a 10,000 cu metre reservoir, which will increase access to potable water in Libreville on completion in mid-to-late 2014.
The sheer volume of public contracts for public works highlights the need for more efficient management of the process. Housing construction, for example, while a national priority, has experienced substantial delays in recent years due to bottlenecks. In 2009, the government set a goal of constructing 5000 new units per year for a total of 35,000 homes by 2017, but little progress had been seen until 2012. Developers and construction companies have faced a number of obstacles in this area, particularly with accessing and registering land. In May 2012, the newly created National Agency for Urban Planning, Topographical Works and Land Registry introduced a simplified administrative procedure for land purchases, which should facilitate new building projects once the system is fully implemented.
If sector logistics can be simplified, housing is set to provide a steady stream of construction business in the medium term. The National Housing Company reportedly received a three-year, CFA100bn (€152.4m) loan from local financial institution BGFIBank to finance building projects nationwide. This new funding, in addition to regular allocations from the state, is expected to support the construction of 3808 new housing units over the next few years.
To this end, the creation of a public procurement authority should help streamline activity in construction and capitalise on key segments such as housing and public works. Gabon’s construction industry has the potential to stimulate economic growth, but tangible progress will be necessary to keep the fiscal deficit at sustainable levels and ensure the productivity of public investments.