April 2011 - Malnor

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There are no restrictions on foreign
investment in Gabon, but the state
reserves the right to invest in ventures
established in strategic sectors such as
the oil and mining industries.
The country has a wealth of agricultural
and fishery resources but these have
been largely neglected and are therefore
underdeveloped. Most of the population
relies on subsistence farming. The
country is also very dependent on
timber and manganese exports.
Gabon’s oil industry is critical to the
country’s economy as it’s a major
source of foreign exchange, accounting
for 45% of GDP, 80% of exports and
60% of budget revenues on average over the last five
years. It is the fifth largest oil producer in sub-Saharan
Africa. Analysts do expect declining oil revenues despite
many arguing that the oil fields have passed their peak
production. The fluctuations in global prices and demand
for commodities led to an economic contraction of 1,4%
in 2009, the first time since 2000.
The country has an oil refinery at Port Gentil and hosts
a number of international oil companies that are active
in the distribution and marketing of petroleum products.
Economic growth rebounded in 2010 with a real GDP
growth rate of 5,4% as the global economy and
commodity prices recovered. GDP composition by sector:
industrial sector 63%, services sector 33% and the
agricultural sector 4%.
The business environment slightly improved in Gabon.
The risk of doing business improved, but it’s still
relatively more difficult and costly to do business in
Gabon compared to other economies in the world. The
country ranked 156 out of 183 countries in 2011, an
improvement from a rank of 158 in 2010.
The government is implementing various reforms
including the elimination of lengthy regulatory procedures
to enhance the business environment for private sector
promotion. The IMF emphasised the importance of
transparent and accountable management of resources
from the country’s extractive sector and identified the
limited access to financial services as a deterrent to
private sector growth.
EXPORT & IMPORT SA // APRIL 2011
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Credit Guarantee country profile
The government is focusing on the development of wood
processing, light metallurgy and ecotourism and energy
in an attempt to diversify economic activities as oil fields
are reaching maturity.
In January this year, the president reshuffled his cabinet
in an attempt to speed up the reform process as he
criticised some members for the slow pace of economic
reform. The president aims to use the remaining oil
wealth to fund $11 billion of spending over his sevenyear
mandate to transform the country into a diversified,
regional economic powerhouse. This comes after the IMF
last year blamed administrative inefficiencies and
resistance to reforms from within the ruling elite for
slowing plans for investment set aside in Bongo’s 2010
budget. Aside from demanding an audit of the bloated
civil service and seeking to help businesses by
centralising tax collection, Bongo has also focused on
increasing foreign direct investment and upgrading the
country’s infrastructure.
In January 2011 the government announced that it will
cut VAT on selected consumer goods including cement
and a three-year price cap on cooking gas in an attempt
to slow the rise in the cost of living as part of an
agreement with trade unions. The EIU reported that the
government is also planning to boost benefits including
bonuses, housing and travel allowance that will increase
salary packages in an attempt to fulfil an electoral
pledge of the president.
Some commentators believe it will be politically difficult
for Bongo to accelerate the pace of reform before midterm
legislative elections due in December and that the
success of his term could depend on whether he
emerges from the polls with a solid majority.
The president successfully completed a visit to Asia to
attract more foreign direct investment in the non-oil
sector. One of these activities includes the signing of a
$1,7 billion joint venture investment project by the
Gabonese government with Olam International Limited,
a Singaporean multinational and leader in the agro-food
processing sector. This is estimated to be the largest
investment deal signed in West Africa. The project will
boost development in Gabon’s fertilizer and palm oil
industries with a job creation capacity of approximately
21 000 jobs directly and indirectly. Construction of the
factory is expected to commence in April 2011.
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