Commodities drive Gabon's upper-middle-income economy

Situated on Africa’s Gulf of Guinea and bordered by a host of low- and lower-middle-income economies, Gabon is part of a select grouping of upper-middle-income countries in sub-Saharan Africa. This is in large part due to it being endowed with substantial natural resources, including oil, metal and mineral reserves, alongside fertile soil and a favourable climate, which greatly benefit the country’s small population.

With a political system that has seen only two heads of state over the past 47 years, Gabon’s natural riches have aided the country’s development, following its independence from France in 1960.

Today, Gabon is part of the Central African Economic and Monetary Community (Communauté Économique et Monétaire des Etats de l’Afrique Centrale, CEMAC), a six-country regional grouping that has allowed for economic integration. Despite being the second-smallest country in the organisation in terms of population, with around 1.7m people, the county boasts the second-largest economy.

In Figures

According to statistics from the World Bank, Gabon’s GDP reached $17.2bn in 2014, compared to $10.2bn in 2006, attesting to the repeated years of growth that oil sales, which still account for the majority of the country’s exports, have allowed. In comparison to its regional neighbours, Gabon has faired considerably well. Although behind Cameroon’s 2014 GDP of $32.5bn, it has a larger economy than most of its neighbours, including Equatorial Guinea and the Republic of the Congo, with 2014 GDP figures of $4.3bn and $14.1bn, respectively.

Geography & Climate

Situated on the equator, Gabon has a total area of 267,667 sq km, which is divided into nine provinces, 36 prefectures and eight sub-prefectures. In addition to its 885-km coastline on the Gulf of Guinea, on the Atlantic Ocean, the country’s land borders extend for some 2251 km with the Republic of the Congo to the south and east, and with Equatorial Guinea and Cameroon to the north.

The country boasts a tropical equatorial climate, exposing the territory to humidity, heavy precipitation levels and high temperatures. Rain is distributed between two rainy seasons: the main one lasting from February to May, and a shorter rainy season extending from mid-September to mid-December. Average annual rainfall was 1800 mm over the past decade, and annual temperatures range from 18° to 36°C, typically peaking in January.

Given its geographic position in the Congo River Basin, rainforests cover 85% of Gabon’s territory. This supports incredible biodiversity, and the country has one of the greatest concentrations of flora and fauna in the world. The natural terrain is made up of a narrow stretch of coastal plains that gradually transitions into hilly hinterlands, and savannah in the country’s east and southern regions.

Rivers remain pivotal for both passenger and merchandise transport across Gabon, and are essential for moving bulky goods such as timber from the central areas of the country to the coast. The Ogooué River is the largest river in Gabon, running for a total of 1200 km. An ongoing government programme is channelling international donor funds towards helping to improve the navigability of the waterway and increasing transport capacity through better signage, the dredging of parts of the river floor and a rehabilitation programme for the river banks.

Natural Resources

Gabon’s economy has largely developed on the back of its hydrocarbons resources. According to BP’s Statistical Review of World Energy 2015, Gabon had 2bn barrels of proven oil reserves, the fifth largest in sub-Saharan Africa after Nigeria, Angola, Sudan and South Sudan, and Uganda. Today, Gabon is Africa’s seventh-largest oil producer. Efforts to encourage new investment and offshore exploration may yet yield positive results.

Gabon’s forests are home to many varieties of tropical wood, an estimated population of 30,000 African forest elephants, various ape species, hippopotami and African forest buffalo. However, as part of the government’s diversification efforts, these areas may come under partial threat due to the promotion of palm and rubber plantations, as well as efforts to produce coffee, cocoa and bananas.

Hydrocarbons

Hydrocarbons reserves has undoubtedly played a key role in fuelling growth, but recent years have seen the government redouble its efforts to diversify the economy by adding more value to the country’s natural resources and supporting the development of other industries.

In fact, oil production has seen a steady decline, falling from a peak of around 370,000 barrels per day (bpd) in 1997 to 220,276 bpd in 2013, according to figures from the Ministry of Petroleum and Hydrocarbons. The decline in oil production follows the natural maturing of existing reserves, which is set to continue over the coming years unless new commercially viable oil reserves are discovered.

Drive for Diversification

This cycle of decreasing oil production has further encouraged Gabonese authorities to establish alternative sources of economic growth. A critical factor in this push has been the establishment of the 2011-16 Emerging Gabon plan, which focuses on the development of other sectors to reduce dependence on oil exports.

Demographics

Present-day Gabon is culturally diverse. The Bantu people were the first to migrate to the area – the term Bantu refers to a language and not an ethnicity – but nowadays Gabon’s population comprises over 40 ethnic groups, most of which trace their linguistic origins to the Bantu. The majority of the population is divided between eight primary ethnic groups: the Fang, Nzabi-Duma, Mbede-Teke, Shira-Punu, Kota-Kele, Myene, Okande-Tsogho and the Pygmies, the first inhabitants of the area. Staffing of government and public administration positions has traditionally aimed to balance these ethnic groups.

Language

This ethnic variety means that over 60 local languages and dialects are spoken in the country today, with Fang, Nzebi, Myene and Sira among the more prevalent ones. Due to a history of colonisation, French has remained the official language, and is preferred for business and education.

Despite its relatively small population compared to other countries on the continent, Gabon is a young country, with 62% of citizens under 25 years of age. Most of the population lives in major centres, with the urbanisation rate reaching 86.9% in 2014. The capital city of Libreville is home to 700,000 inhabitants, while Port-Gentil, where much of the country’s economic activity takes place, has 100,000 residents. Other increasingly important urban centres include Franceville, Lambaréné and Oyem.

Employment

Creating enough jobs for the young and growing population is one of the government’s main challenges. Economic growth has not always translated into job creation – particularly in the oil and gas sector – and the level of unemployment in Gabon remains relatively high. The problem is especially acute for young people, for whom unemployment was last calculate at 20.4% in 2010.

According to the World Bank, several factors are to blame for the high rate of unemployment, including economic dependence on hydrocarbons, which is not a particularly labour-intensive industry, and the disconnect between graduates’ skills and the needs of employers in the private sector.

Immigration

CEMAC member states have been working on an agreement to allow for the free movement of people in the sub-region, but in the meantime Libreville has maintained a strict border policy to prevent irregular immigration. The border controls have become increasingly important in recent years as authorities attempt to curb the rise in poaching and informal employment of illegal residents.

Fighting Corruption

Suffering from capital flight at the highest levels, Gabon ranked 94th out of 175 countries surveyed in the 2014 Transparency International index on corruption. The government has taken various steps in recent years to improve the state of transparency and good governance in Gabon, albeit with mixed results.

President Ali Bongo Ondimba, who upon election referred to corruption as a “cancer” that “has to be stopped”, embarked on a drive to raise public awareness of the problems wrought by corruption, going so far as to sponsor demonstrations as part of International Anti-Corruption Day and supporting training seminars and advertising campaigns. The results, however, have been difficult to gauge.

An increasing number of audits in recent years, such as one in 2010 that helped remove thousands of phantom job positions in the public sector, have helped improve the country’s bureaucracy and its use of public resources. Stronger government controls over expenditure are now of the utmost importance after the fall in oil prices in 2014 forced the government to revise its 2015 budget and reduce spending.