Gabon: Formalising the retail sector
The retail sector is set to see a major capital injection next year, following the signature of a contract with Swiss group Webcor to construct Libreville’s largest-ever market centre. The launch of this project, slated for early 2013, is a step forward in the country’s efforts to professionalise the retail sector, which continues to be dominated by informal commerce.
Webcor, a group specialising in the production and distribution of food products and construction materials, has committed to investing CFA27bn (€41.16m) in the next three years to construct and operate a commercial zone, the Grand Marché, in the Peyrie Gardens neighbourhood of the capital. The firm was accorded a 50-year lease for the plot in the capital and plans to construct a formal, modern market space that will ultimately accommodate 2000 merchants and create 1000 new jobs, according to project summaries.
The Gabonese government will hold a 10% stake in the operation, which was initially unveiled in June 2010 following the signature of a basic convention outlining the project parameters. However, it was not until a follow-up agreement was signed on November 16 that the financial details of the project, including eligibility for fiscal and customs incentives, were clarified.
The first phase of the project was set to launch on December 1, with the initial investment to come in the first quarter of 2013. Construction is expected to require 36 months to complete, placing the tentative delivery date in mid-2016.
The Grand Marché will help encourage further formalisation of a retail market that is still fairly undeveloped. In spite of the oil-rich country’s high per capita GDP, only a handful of large distribution brands, such as Prix Import and France-based Géant Casino, which holds a 10% share of the formal retail market, have implanted themselves in Gabon. However, these companies have limited territorial coverage and even the country’s largest wholesale, distribution and retail operation in terms of market coverage, the African Business Operations Company-Gabon Distribution Company (Compagnie d’Exploitations Commerciales Africaines-Gabonaise de Distribution, CECA-GADIS), is only present in select urban areas.
However, high Customs duties and negligible local production of consumer goods means that prices in the formal retail market are beyond the reach of a large proportion of Gabonese households. As such, the majority of retail activity takes place in more informal street markets; indeed, the informal sector represents an estimated 80% of retail business.
Given the disconnect between the purchasing power of Gabonese nationals and import prices, street markets will continue to play an important role in the retail sector in the foreseeable future. The irregularity of these types of markets, combined with insufficient public oversight, has given rise to a large class of informal merchants. The government has moved to crack down on unauthorised vendors in the past year, particularly in advance of the 2012 Africa Cup of Nations football tournament in January. However, local press reports indicate that many vendors have returned in the past three months, when demand for school supplies and other household goods typically increases.
This phenomenon is particularly evident in the capital’s largest outdoor market, the Marché Mont-Bouët, where overcrowding and unregulated expansion have led to dangerous operating conditions. A wood-constructed section of the market caught fire in October, leaving large sections inoperable; this was the third fire in the Mont-Bouët market in as many years.
Upon completion, the Grand Marché is intended to replace Mont-Bouët as the capital’s primary market space, in the interest of bringing increased formality and rigour to the retail sector. The regularisation of Libreville’s street markets should also bring in a steadier source of revenue to the government, by formalising the collection of taxes and rent payments from merchants running stalls in the new zone.
The particularities of the Gabonese retail sector mean that open-air markets will continue to play an essential role in meeting local demand for consumer goods. However, the new Grand Marché project represents an important effort to bring more structure and oversight to these operations. If accompanied by sufficient public oversight, this modernised shopping area may help to formalise the retail sector in the medium term.