Gabon establishes special economic zones and offers investors benefits

As part of its economic diversification strategy, Gabon is developing three new special economic zones (SEZs), offering companies a range of investment incentives, each of which is to be dedicated to the development of different industrial sectors.

Up & Running

The first zone to have been launched is the Nkok SEZ, work on which began in 2010, and it began exporting goods in 2015. The zone is located around 30 km from Libreville, with direct road and rail connections to the Port of Owendo, as well as an estuary terminal of its own. It hosts a range of industries, including agribusiness, chemicals and plastics, pharmaceuticals, metals and financial services, albeit with a particular focus on wood-related industries such as timber processing and furniture manufacturing. Firms based in the zone benefit from incentives including full exemption from Customs duties on imported equipment and from corporate and capital gains, and a 10-year exemption from income tax.

The SEZ is being developed by Gabon Special Economic Zone (GSEZ), a joint venture between the Gabonese government and Singapore-based agribusiness firm Olam International, which is involved with the government in a range of major diversification projects. In April 2016 the Lagos-headquartered, pan-African financial institution Africa Financial Corporation announced that it would also invest $140m in GSEZ, for a stake of unspecified size in the firm.

Progress To Date

By 2015 the backers of GSEZ had invested around $600m in infrastructure and developed around 500 ha of land at the project site, to be eventually raised to over 1100 ha. The zone has attracted 80 companies so far, including 15 factories that were up and running as of May 2016. Recently opened facilities in the zone include a car battery factory owned by Chinese firm Haisheng Rong Hua, production at which began in April 2016. Total employment in the zone as of May 2016 stood at 1216 people, up from 1148 three months previously. “The launch of the Nkok SEZ has been broadly positive,” Yves Picard, director of the French Development Agency’s Gabon operations, told OBG, citing proximity to the country’s railway as a particular advantage. He said, “It is still in its early stages of development, but so far investors have responded strongly to it.”

Uncertain Timelines

Two more SEZs are also in the pipeline, though it is currently unclear when the projects will go ahead, with the current low oil price climate putting a damper on plans. One of these new zones is an €354.25m, 50,000-ha agribusiness-focused SEZ planned to be built in Boumango, near Franceville in south-eastern Gabon; however, little information regarding the timeline for the zone or planned projects has been released to date.

Another zone, in which Olam will also play a major role, will be based at Mandji Island, near the country’s hydrocarbons sector capital Port-Gentil, and will focus on adding value to oil and gas production in particular, most notably in the form of two planned gas-fed fertiliser plants. One of these is to be built by Gabon Fertiliser Company in an 80:20 joint venture between the Singaporean firm and the government, and will produce 1.3m tonnes per annum of ammonia urea fertiliser. While the plant was originally due to open in 2017, construction work has not begun on the project at the time of press, and indeed there has been little news on the project at all in recent years. Olam has announced plans to reduce its share in the project to below 50%, but as yet no other firm appears to be willing to take over the company’s stake.

The other planned facility is a nitrogen, phosphorus and potassium fertiliser joint venture between state-backed Société Equatoriale des Mines (SEM) and Morocco’s publicly owned phosphate company Office Chérifien des Phosphates (OCP). To be built at a cost of $2.3bn, the plant is part of OCP’s plans to quintuple its sales in Africa by 2025. SEM has suggested that the facility could be launched early in the next decade.