Paving the way: Road construction projects continue to provide opportunities for foreign investment

The development of road transport infrastructure is one area that can greatly contribute to economic growth in Gabon, mostly by providing access to the interior of the country, where many resources are still unexploited due to poor transport links. The government is aware of this potential and has prioritised the development of a road network to diversify the economy and foster regional trade. International lending has so far played a key role in the financing of projects, the construction of which continues to offer investment opportunities.

The government created the Programme for the Development of the Road Network (Programme d’Amé- nagement du Réseau Routier, PARR) in 2002 with the purpose of laying roughly 2500 km of new roads by 2015. The African Development Bank (AfDB) has so far been one of the chief contributors by working to set up Gabon’s Road Programme (Programme Routier, PR).

PHASE 1: The AfDB conceded in 2007 a CFA165.08bn (€247.6m) loan to fund the first phase of the PR (PR1), the total cost of which amounted to around CFA183.4bn (€275.1m), with the government covering 10% of this, or roughly CFA18.3bn (€27.5m).

The PR1 targets the construction of three road segments, representing around 240 km. The first segment, Fougamou-Mouila (105 km), is a part of the trans-African corridor connecting Cameroon to the Republic of the Congo (Congo-Brazzaville) via Gabon, and more generally Tripoli, Libya to Windhoek, Namibia. The second, Ndendé-Lebamba (37.7 km), is itself a section of the Ndendé-Koulamoutou road designed to connect the south of Gabon to the country’s railway network, the Trans-Gabon Railway (see overview). The third and last segment of PR1, La Leyou-Lastoursville (97 km), runs along the railway, this contributes to the creation of an alternative means of transportation to the train. The three segments all have been awarded to Chinese companies, including China Construction Company Corporation (CCCC) China Overseas Engineering Corporation, and Sinohydro; and, according to government estimates made public in February 2013, the first two should be ready by July 2014. The last one was expected to be ready by December 2012, although work was still under way in mid-2013.

While road improvements are still ongoing, some positive effects are already emerging. “If you look to Mouila, for example, you will find improving road access is contributing to the development of tourism,” JeanFelix Edjodjom'ondo, transport specialist for the AfDB, told OBG. “Today, it is impossible to stay in a hotel in Mouila without booking in advance,” he added.

Over the long run, the PR1 is expected to continue having a positive effect on many other levels. Trade, for instance, could benefit from the completion of interregional roads. According to the AfDB, a 30% increase in trade within the Economic Community of Central African States (Communauté Économique des États de l’Afrique Centrale, CEEAC) is expected by 2015.

PHASE 2: Building on PR1 studies and lessons learned, the AfDB approved in September 2011 a €230m loan to fund the second phase of the PR (PR2), covering 86.32% of the total cost, while the government contributed 15.8%, or €36.45m. The PR2 covers, among other areas, the construction of three road segments. The first one, Mouila-Ndendé (70 km), is a part of the corridor connecting Cameroon to Congo-Brazzaville. Santullo Sericom, a subsidiary of the French-Guinean Santullo Group, is responsible for its construction, although no completion date has so far been specified. Ndendé-Tchibanga (85 km), the second segment, consists of half the road planned to link the CameroonCongo-Brazzaville corridor to the future deepwater port in Mayumba. While government sources have noted that there is at present no set delivery date, nor a contract covering the first half of the road, the second, Tchibanga-Mayumba (106 km), has already been contracted to Santullo and is expected to be ready by May 2014. The last of the three segments, Port-Gentil-Mandorové (34 km), integrates a multi-modal axis extending from the economic capital of the country to the central city of Lambaréné and Ndjolé, but no contract has yet been announced. Once completed, these road connections should reduce vehicle operation costs by 38%, as well as time travel between Libreville and Tchibanga from 13 hours to 8 hours. Going forward, the AfDB intends to continue supporting the PARR. “A third phase is currently under consideration,” Edjodjom’ ondo told OBG. “Once the government takes a decision, the AfDB will study its investment options,” he added.

So far, the purpose of the AfDB’s contribution under the programme has been to open up the country’s interior, where agriculture, mining and tourism, among other sectors, can strengthen as a result of better road access. The organisation has sought to facilitate the connection of potential production points in the interior with national, regional and global markets, serving the latter via the ports of Owendo and Port-Gentil. Moving to a third phase would allow the AfDB to enhance Gabon’s road network, especially regarding the connection to Congo-Brazzaville, by funding the construction of the remaining segment, Ndendé-Doussala.

OTHER LENDERS: Aside from the AfDB, other international lenders also play a role in road infrastructure development. At the moment, they include the French Development Agency (Agence Française de Developpement, AFD) and the Islamic Development Bank (IDB).

The AFD currently supports the development of the national road network with a programme to rehabilitate the 46-km Ndjolé-Médoumane segment of the National Road 2 (Route Nationale 2, RN2), integrating the strategic Libreville-Yaoundé corridor. The AFD has so far conceded two loans in this context, a first of €35m and a second of €44m. Dragages and DTP Terrassements, two subsidiaries of the French firm Bouygues Construction, were awarded the respective contracts. Improvements along this road should contribute to reducing travel time between Libreville and the north of the country, accelerating the transport of minerals.

The IDB, for its part, has been co-funding for three segments with the Gabonese government, Akié niOkondja (74 km), Lalara-Koumameyong (63 km) and Koumameyoung-Ovan (51 km). All of these were awarded to Chinese companies China First Highway Engineering Company and Sinohydro, and are expected to be completed by mid-2014. Finishing this set of roads should contribute to improving accessibility within, and eventually access to, the north-east of the country, including the untapped iron ore reserves of Belinga.

FOREIGN INVESTMENT: Chinese companies, in particular, appear to have taken their place alongside former European firms. It was China Road and Bridge Corporation, a subsidiary of China Communications Construction Company, which in October 2012 was awarded a Gabon government-backed project to the tune of $663m, and covers construction of a 93-km highway and two bridges connecting Port-Gentil to Omboué, next to Nkomi Lagoon. Once finished, the project will connect the commercial capital of the country and one of its major ports, Port-Gentil, to the inland highway.