Gabon: Year in Review 2012
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The economy performed well in 2012 despite a fall in oil production, with GDP growing an estimated 6.1%, down slightly from 6.7% in 2011, according to the IMF. While the country continues to rely on petroleum export revenue, 2012 showed progress on several elements of the national economic development strategy, Emerging Gabon. New investments in sectors such as agro-industry, mining and timber processing, plus considerable public spending on infrastructure, have helped to push the economy towards greater diversification. Heading into 2013, the continuation of the government’s infrastructure building programme and growing foreign investment in the crucial non-hydrocarbon economy are expected to maintain growth at 6-7%.
Although value-added industries and services are of a key importance for the economy’s overall sustainability, commodities continue to underwrite growth. New activities in the mining sector are particularly promising for exports. Gabon has long been a key world producer of manganese, and Australia-based BHP Billiton is in talks with the state regarding the imminent launch of a new operation in the southeast. With the new project coming online, Gabon is projected to surpass South Africa as the world’s largest manganese producer by 2015, with an annual production of 5.7m tonnes.
The country also has significant potential for iron ore mining; its northeastern Belinga deposit holds an estimated 1bn tonnes of reserves. Development of the site has been stalled since 2010, but the deposit should serve as an important driver of foreign exchange receipts once it enters into exploitation.
And yet, as oil and manganese account for 90% of all exported goods and 45% of nominal GDP, the economy remains vulnerable to external shocks. Efforts to develop non-extractive industries will be necessary to ensure economic stability in the long term.
This is most obvious with moves to channel forestry’s value-added activities to benefit the local economy. Following a ban on raw timber exports in May 2010, export volume decreased by 71.6% from 2010 to 2011, as the new regulation came into effect before local processing could adjust. While companies across the board have seen profits hard hit, operators such as SNBG, Precious Woods, and Rougier have been able to boost their processing capacity in the past year and position themselves to take on a greater market share.
The establishment of the Nkok Special Economic Zone (Zone Économique Spéciale, ZES) is expected to support growth in timber and other industries. Nkok is being developed on an 1126-ha site 27 km east of Libreville. A total of 58 companies have committed to setting up in the zone, and the first operations are expected to launch in 2013. The ZES will devote 40% of its space for timber processing plants, but will welcome a variety of operations, including minerals processing and the fabrication of paper products.
Gabon also saw a major investment in agro-industry in 2012. The Singapore-based agricultural value chain firm, Olam, launched large-scale projects in rubber and palm oil cultivation, which will be primarily devoted to export. The rubber plantation will entail a total investment of €141.13m and is set to launch in early 2013. The first harvest is expected in 2020, with initial output estimates at 62,000 tonnes of natural latex per year. The palm oil plantation, launched in 2012, is expected to ultimately cover 300,000 ha. Olam hopes that once the project reaches full operation, Gabon will surpass Nigeria as the world’s largest producer of palm oil.
In order to create a solid basis for economic growth, the National Agency for Public Works (Agence Nationale des Grands Travaux, ANGT) introduced a National Infrastructure Master Plan in June 2012, which should help to better coordinate and prioritise infrastructure building. The programme, drawn up by the US-based firm Bechtel in collaboration with the government, outlines a 15-year building strategy that aims to establish Gabon as an emerging global economy by 2025.
The plan focuses on improvements in sectors that stand to have the greatest impact on economic development, namely transport, energy and real estate. The ANGT estimates that implementation of the entire master plan will require CFA7.4trn (€11.28bn) in public financing between 2011 and 2025, or an average annual public investment budget of CFA493.5bn (€752.34m) over the next 15 years.
This is an ambitious financing goal, but one that is not out of reach considering that 2010 public investment costs totalled CFA732.2bn (€1.12bn). But private sector investment will be critical to meeting project goals, and the government has indicated it will embrace a number of engagements, including public-private partnerships, strictly private investment, and build-operate-transfer contracts.
While the economy remains dependent on hydrocarbons revenue, growing levels of activity and investment in non-petroleum sectors bode well for economic diversification in the medium- to long-term. However, as the country is in a complicated transition period, increasing partnerships with foreign firms and growth in value-added industry should facilitate more sustainable economic expansion.